He can claim residence in state with income tax rate

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Reference no: EM131884060

You tell your client John Smith (who will only invest in bonds) that he should consider the following: He can claim residence in a state with a 3% income tax rate, and his Federal bracket is 35%. You have two bonds to offer him: a) a $1000 par bond that is fully taxable and pay 10% and b) a $1000 par bond that pays 7% but is exempt for state and Federal taxes. Which one should he purchase?

Reference no: EM131884060

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