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Nelson has the choice between investing in a city of Fruithurst bond at 5.1 percent...

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Accounting

Nelson has the choice between investing in a city of Fruithurst bond at 5.1 percent or a J.B. Ribs, Inc. bond at 6.6 percent. Assuming that both bonds have the same nontax characteristics and that Nelson has a 40 percent marginal tax rate, in which bond should he invest? What interest rate offered by J.B. Ribs, Inc. would make Nelson indifferent between investing in the two bonds?

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