Reggie wants to invest $10,000. His options are

a. Gibraltar Corporation bonds with an annual interest rate of 8%.

b. State of Hawaii bonds with an annual interest rate of 5%.

c. Series EE savings bonds; a $10,000 investment will pay $14,300 in 5 years.

Assume that Zane is a 28% marginal tax rate payer, the time value of money is 6%, and Zane intends to hold any amounts invested for 5 years. Which option will provide the greatest after-tax return, ignoring state income tax implications? Would your answer change if Zane’s marginal tax rate is 35%?