Jenny is assisting a taxpayer with in evaluating two different investment options that bear similar risk. Assume that if any of the assets are taxed on their return it is taxed annually and the cost of the investment is not deductible. The following table outlines the pre-tax rates of return and tax treatment for each of the investments.

Investment	Taxed?	Pre-tax rate of return per annum
A	Tax-exempt	3%
B	Fully taxed	5%

1. At what tax rate will the taxpayer Jenny is assisting be indifferent between SPDA A and SPDA B?
2. Ignoring your answers to parts a. and b., assume that the answer to part a. was 20% (that this was the threshold for tax rate where the taxpayer would be indifferent), which investment should Jenny have the taxpayer choose if his marginal tax rate is higher than this at 30%?