Reference no: EM132031736

1. The Wesson Wisconsin State Bank has purchased a bank-qualified municipal bond with a coupon rate of 7.5%. The bank had to borrow funds to make this purchase at a cost of 6%. The bank is in the 25% tax bracket. What is the net after-tax return on this bank-qualified municipal bond?  

A. 7.5%

B. 2.7%

C. 3.0%

D. 1.5%

E. None of the options is correct

2. In a break-even analysis, an increase in variable cost per unit:

a) increases contribution margin

b) decreases marginal costs

c) raises an organization's break-even quantity

d) has no impact on the break-even calculation