(Answered) The 6-month cds consist of two 50000 certificates both of

Accounting

The 6-month CDs consist of two $50,000 certificates, both of which yield 4% interest. One CD matures on January 3, 2013. Nick's banker tells him that he can renew the CD for one year at 4%.

Nick's stockbroker tells him that he can purchase tax-exempt bonds with a yield of 3%. Nick would like you to determine whether the tax-exempt bonds provide him a better after-tax return than the CD.

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