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An Investment Is Available That Pays a Tax-Free 7

Question 61

Multiple Choice

An investment is available that pays a tax-free 7%.The corporate tax rate is 40%.Ignoring risk, what is the pre-tax return on taxable bonds?

A) 4.20%
B) 7.00%
C) 7.47%
D) 11.67%
E) None of the above

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