Curtis invests $300,000 in a city of Athens bond that pays 5 percent interest. Alternatively, Curtis

 
   

Need your ASSIGNMENT done? Use our paper writing service to score better and meet your deadlines.  

Curtis invests $300,000 in a city of Athens bond that pays 5 percent interest. Alternatively, Curtis could have invested the $300,000 in a bond recently issued by Initech, Inc. that pays 7 percent interest with similar risk as the city of Athens bond. Assume that Curtis's marginal tax rate is 24 percent.

What is Curtis's after-tax rate of return on the city of Athens bond?

4.84 percent

5.00 percent

None of the choices are correct

3.32 percent

7.00 percent