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How much interest after-tax would Dana earn

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Question - Dana intends to invest $44,000 in either a Treasury bond or a corporate bond. The Treasury bond yields 5 percent before tax and the corporate bond yields 6 percent before tax.

a-1. Assuming Dana's federal marginal rate is 24 percent and her marginal state rate is 5 percent, which of the two options should she choose? Assume that Dana itemizes deductions.

a-2. How much interest after-tax would Dana earn by investing in the corporate bond?

b-1. If she were to move to another state where her marginal state rate would be 10 percent, which of the two options should she choose? Assume that Dana itemizes deductions.

b-2. How much interest after-tax would Dana earn by investing in the corporate bond as per requirement b-1?

Reference no: EM132549705

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