Your client's federal marginal tax rate is 36 percent, and the state marginal rate is 7 percent. The client does not itemize deductions on his federal return and is considering investing in a municipal bond issued in his state of residence that yields 5 percent. What is the adjusted taxable equivalent yield?

a. 3.2%

b. 4.65%.

c. 5.38%.

d. 7.81%.

e. 8.40%.