Assume That John's Marginal Tax Rate Is 37 Percent

Multiple Choice

Assume that John's marginal tax rate is 37 percent. If a city of Austin bond pays 6 percent interest, what interest rate would a corporate bond have to offer for John to be indifferent between the two bonds?

A) 37.00 percent
B) 9) 52 percent
C) 6) 00 percent
D) 3) 78 percent
E) None of the choices are correct.