Business, 12.03.2021 15:00 bartfrank447

1. Curtis invests $275,000 in a city of Athens bond that pays 4.75% interest. Alternatively, Curtis could have invested the $275,000 in a bond recently issued by Initech, Inc. that pays 6.50% interest with similar risk as the city of Athens bond. Assume that Curtis's marginal tax rate is 28%. If Curtis invested in the Initech, Inc. bonds, what would be his after-tax rate ofreturn from this investment?
A. 3.42%
B. 4.75%
C. 4.68%
D. 1.71%
E. None of the choices are correct.
2. Curtis invests $250,000 in a city of Athens bond that pays 4.50% interest. Alternatively, Curtis could have invested the $250,000 in a bond recently issued by Initech, Inc. that pays 6.00% interest with similar risk as the city of Athens bond. Assume that Curtis's marginal tax rate is 28%.
How much explicit tax would Curtis incur on interest earned on the Initech, Inc. bond?

A. $10,800
B. $4,200
C. $3,150
D. $8,100
E. None of the choices are correct.
4. Curtis invests $400,000 in a city of Athens bond that pays 6.00% interest. Alternatively, Curtis could have invested the $400,000 in a bond recently issued by Initech, Inc. that pays 6.75% interest with similar risk as the city of Athens bond. Assume that Curtis's marginal tax rate is 28%.
How much implicit tax would Curtis pay on the city of Athens bond?

A. $24,000.00
B. $840.00
C. $740.00
D. $3,000.00
E. None of the choices are correct.
11. If Joel earns a 7% after-tax rate of return, $27,000 received in two years is worth how much today?
A. $27,000.
B. $25,200.
C. $23,571.
D. $28,890.
E. None of the choices are correct.

Answers: 1

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1. Curtis invests $275,000 in a city of Athens bond that pays 4.75% interest. Alternatively, Curtis...

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