# Finance

Kim Davis is in the 40% personal tax bracket. She is considering investing in HCA (taxable) bonds that carry a 12% interest rate.
a. What is her after-tax yield (interest rate) on the bonds?
b. Suppose Twin Cities Memorial has issued tax exempt bonds that have an interest rate of 6%. With all else the same, should Kim buy the HCA or the Twin Cities bonds?
c. With all else the same, what interest rate on the tax-exempt Twin Cities bonds would make Kim indifferent between these bonds and the HCA bonds?

1. 👍 0
2. 👎 0
3. 👁 445
1. 666

1. 👍 0
2. 👎 0

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