Question: James invests $ 1 0 0 , 0 0 0 in a city of Athens bond that pays 8 % interest. Alternatively, James could have

James invests $100,000 in a city of Athens bond that pays 8% interest. Alternatively, James could have invested the $100,000 in a bond recently issued
by HighTech, Incorporated that pays 10% interest with similar risk as the city of Athens bond. Assume that James's marginal tax rate is 25%. Which bond
should James should choose and why?
Multiple Choice
James should be indifferent between the two bonds.
The HighTech, Incorporated bond because it earns a higher pre-tax rate of return.
The city of Athens bond because it earns a higher after-tax rate of return.
The city of Athens bond because it earns a higher pre-tax rate of return.
The HighTech, Incorporated bond because it earns a higher after-tax rate of return
James invests $100,000 in a city of Athens bond that pays

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