Charlene Can Invest $4,000 of After- Tax Dollars (AT$) Directly

Charlene can invest $4,000 of after- tax dollars (AT$) directly in a taxable bond outside an IRA, or she can contribute the $4,000 to a nondeductible IRA and invest in the same bond through the IRA vehicle. In either case, the bond yields an annual 7% before- tax rate of return (BTROR) . Charlene's marginal tax rate is 20%, and she expects it to remain so for the entire investment horizon of 25 years. What is her annualized after- tax rate of return (annualized ATROR) for the "bond outside the IRA"?

A) 6.5%
B) 7%
C) 5.6%
D) 6%