Assume That Lavonia's Marginal Tax Rate Is 22 Percent

Multiple Choice

Assume that Lavonia's marginal tax rate is 22 percent. If a city of Tampa bond pays 5.4 percent interest, what interest rate would a corporate bond have to offer for Lavonia to be indifferent between the two bonds?

A) 22.00 percent
B) 5) 40 percent
C) 7) 40 percent
D) 4) 30 percent
E) 6) 92 percent