2. Jackson has the choice to invest in city of Mitchell bonds or Sundial, Incorporated corporate bonds that pay 8.8 percent interest. Jackson is a single taxpayer who earns $68,000 annually .Assume that the city of Mitchell bonds and the Sundial, Incorporated bonds have similar risk. What interest rate would the city of Mitchell have to pay in order to make Jackson indifferent between investing in the city of Mitchell and the Sundial, Incorporated bonds for 2020?

3. Curtis invests $275,000 in a city of Athens bond that pays 4.75 percent interest. Alternatively, Curtis could have invested the $275,000 in a bond recently issued by Intech, Incorporated that pays 6.50 percent interest with similar risk as the city of Athens bond. Assume that Curtis's marginal tax rate is 24 percent. How much explicit tax would Curtis incur on interest earned on the Intech, Incorporated bond?

Answer rating: 100% (QA)

ANSWER 2 Jacksons marginal tax rate is 25 so his aftertax rate of return on the Sundial Inc bonds would be 435 Therefore the city of Mitchell must pay ... View the full answer