Dick Dowen is considering three investment opportunities: 1. A 4.4% city of Chicago bond that...
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Dick Dowen is considering three investment opportunities: 1. A 4.4% city of Chicago bond that is tax exempt at both state and federal levels. 2. A 5.1% state of Illinois bond that is tax exempt at the federal level but taxable at the state level. 3. A 6.7% McDonald's corporate bond that is taxable at both the state and federal levels. (Hint: Use the TETR.) If the Illinois state tax rate is 6% and Dick's marginal federal tax rate is 30 % , which investment yields the highest after-tax return
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