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Hugh has the choice between investing in a City of Heflin bond at 4.80 percent...

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Accounting

Hugh has the choice between investing in a City of Heflin bond at 4.80 percent or investing in a Surething Incorporated bond at 7.25 percent. Assuming that both bonds have the same nontax characteristics and that Hugh has a 40 percent marginal tax rate, what interest rate does Surething Incorporated need to offer to make Hugh indifferent between investing in the two bonds?

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