Angela Jones is considering two investments. The first produces $5,000 of tax-exempt income. The second produces income that will be subject to tax at a rate of 15%. Which of the following statements is true regarding Angela’s choice?

A). Angela should always choose the first investment because it minimizes her tax costs.

B). If the second investment generates $5,500 of before-tax income, Angela should choose the first investment.

C). If the second investment generates $6,500 of before-tax income, Angela should choose the second investment.

D). Both B. and C. are true.

Answer rating: 100% (QA)

option C is correct if second investment generates 6500 ... View the full answer