Curtis Invests $250,000 in a City of Athens Bond That

Multiple Choice

Curtis invests $250,000 in a city of Athens bond that pays 7% interest. Alternatively, Curtis could have invested the $250,000 in a bond recently issued by Initech, Inc. that pays 9% interest with similar risk as the city of Athens bond. Assume that Curtis's marginal tax rate is 28%. If Curtis invested in the Initech, Inc. bonds, what would be his after-tax rate of return from this investment?

A) 5.04%
B) 7.00%
C) 6.48%
D) 2.52%
E) None of these