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 Jim Roberts is in the 35% personal tax bracket. He is considering investing in FPC bonds that have an interest rate of 9.3%.

2 .a. What is his after-tax yield (interest rate) on the bonds?

 

2 .b. Suppose Mercy Hospital (a not for profit) is offering bonds that have an interest rate of 6.5%. With all else the same, should Jim buy the FPC or Mercy bonds?

Financial Management, Finance

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