McGraw-Hill's Taxation of Individuals 3rd Edition by Brian Spilker,Benjamin Ayers,John Robinson,Edmund Outslay ,Ronald Worsham,John Barrick,Connie Weaver

Exercise 27

Melinda invests $200,000 in a City of Heflin bond that pays 6 percent interest.Alternatively, Melinda could have invested the $200,000 in a bond recently issued by Surething, Inc.that pays 8 percent interest with similar risk and other nontax characteristics to the City of Heflin bond.Assume Melinda's marginal tax rate is 25 percent.