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Curtis invests $225 000 in a city of Athens bond that pays 4 25% interest Alternatively Curtis could have

Question

Curtis invests $225,000 in a city of Athens bond that pays 4.25% interest. Alternatively, Curtis could have

invested the $225,000 in a bond recently issued by Initech, Inc. that pays 5.50% interest with similar risk as the city of Athens bond. Assume that Curtis’s marginal tax rate is 24%.

How much implicit tax would Curtis pay on the city of Athens bond?

Multiple Choice

  • $9,562.50
  • $466.00
  • $366.00
  • $2,812.50
  • None of the choices are correct.

Business

Curtis invests $225 000 in a city of Athens bond that pays 4 25% interest Alternatively Curtis could have