Mr. Fox has $100,000 to invest. He could buy corporate bonds with a 10% before-tax yield or
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Question:
Mr. Fox has $100,000 to invest. He could buy corporate bonds with a 10% before-tax yield or tax-exempt bonds with an 8% before-tax yield. Which of the following statements is false?
a) If Mr. Fox invests in the tax-exempt bonds, he will pay $2,000 implicit tax every year.
b) If Mr. Fox's marginal tax rate is 15%, he should invest in the corporate bonds.
c) If Mr. Fox's marginal tax rate is 37%, he should invest in the tax-exempt bonds.
d) None of these choices are false.
Related Book For
Income Tax Fundamentals 2020
ISBN: 9780357108239
38th edition
Authors: Gerald E. Whittenburg, Martha Altus-Buller, Steven Gill
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