1. Susan received $45,000 from her ex-husband Brian in 2013. According to their divorce settlement, Brian should pay $45,000 to Susan every year until their son Joshua turns 18, then the amount will be reduced to $25,000. Which of the following statements regarding income tax is true?

Susan should pay income tax on $25,000, and Brian should pay income tax on $20,000.

Susan should pay income tax on $45,000.

Brian should pay income tax on $25,000, and Susan should pay income tax on $20,000.

Brian should pay income tax on $45,000.

2. Please calculate the after-tax return on the following securities for a company that is in the 30% federal tax bracket. Assume the tax rate on dividends is 15%.

A. Treasury bonds at 5%

B. Corporate bonds at 8.25%

C. Municipal bonds at 7%

D. Preferred stock at 6.5%