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What is brandon after-tax rate of return on the city

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Reference no: EM132938088

Brandon invests $250,000 in a city of St. Louis bond that pays 7% interest. Alternatively, Brandon could have invested the $250,000 in a bond recently issued by Dell, Inc. that pays 9% interest with similar risk as the city of St. Louis bond. Assume that Brandon's marginal tax rate is 24%.

Problem 1: What is Brandon's after-tax rate of return on the city of St. Louis bond?

A) 5.32%
B) 6.84%
C) 7.00%
D) 9.00%
E) None of the choices are correct

Reference no: EM132938088

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