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July 26, 2014

Homework Help: Finance

Posted by Shan on Monday, February 7, 2011 at 12:10pm.

Corporate bonds issued by Johnson Corporation currently yield 8.5%. Municipal bonds of equal risk currently yield 6%. At what tax rate would an investor be indifferent between these two bonds? Round your answer to two decimal places.

The answer I keep coming up with is incorrect. I use this formula: 8.5(1-.06)=7.99, but when i work the homework problem in the book I get a different answer.

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