Jackson has the choice to invest in city of Mitchell bonds or Sundial, Inc. corporate bonds th8a7t) pay10% interest. Jackson is a single taxpayer who earns $55,000 annually. Assume that the city ofMitchell bonds and the Sundial, Inc. bonds have similar risk.What interest rate would the city of Mitchell have to pay in order to make Jackson indifferent between investing in the city of Mitchell and the Sundial, Inc. bonds for year 2017?
A) 7.20%
B) 10.00%
C) 7.50%
D) 8.00%
E) None of the choices are correct.
Correct Answer:
Verified
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