4. Curtis invests $400,000 in a city of Athens bond that pays 6.00% interest. Alternatively,...
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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?
Multiple Choice
$24,000.00
$840.00
$740.00
$3,000.00
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? Use Exhibit 3.1. (Round present and future value factor(s) to 3 decimal places.)
Multiple Choice
$27,000.
$25,200.
$23,571.
$28,890.
None of the choices are correct.
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