A 70% Coupon Bond Issued by the Provincial Government of Alberta

A 7.0% coupon bond issued by the provincial government of Alberta sells for $1,000. What coupon rate on a corporate bond selling at $1,000 par value would produce the same after tax return to the investor as the tax-free municipal bond if the investor is in the 29% marginal tax bracket?

A) 7.59%
B) 12.25%
C) 9.86%
D) 14.63%
E) 30.71%