A Municipal Bond Issued by the City of Gainesville Provides

A municipal bond issued by the City of Gainesville provides a 7.6 percent after-tax return. For an individual investor in the 31 percent tax bracket, (1) what return on a corporate bond and (2) what return on a preferred stock would produce the same after-tax return to the investor as the municipal bond?

A) 8.28% and 10.25%, respectively.
B) 11.01% and 11.01%, respectively.
C) 11.01% and 8.38%, respectively.
D) 24.52% and 11.01%, respectively.
E) 24.52% and 9.58%, respectively.