Highest after-tax real rate of interest

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Given a nominal interest rate of 5 percent, in which of the following cases would you earn the highest after-tax real rate of interest?

a. Inflation is 3 percent; the tax rate is 20 percent.

b. Inflation is 2 percent; the tax rate is 40 percent.

c. Inflation is 1 percent; the tax rate is 60 percent.

d. The after-tax real interest rate is the same for all.

Reference no: EM13898768

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