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Karen has long-term capital gains of $1,000. He also has 5000 in municipal bonds paying...

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Accounting

Karen has long-term capital gains of $1,000. He also has 5000 in municipal bonds paying 4% interest. Finally, he has a bank account that pays interest of $1,800. Assuming these are all of Jamess transactions, what is his effective tax rate assuming his ordinary income tax rate is 25%?

A. 7.7%

B. 15%

C. 20%

D. 25%

E. None of the Above

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