Namratha has the choice between investing in a city of Watkinsville bond at 4.5 percent or a Moe's, Incorporated bond at 7 percent. Assuming that both bonds have the same nontax characteristics and that Namratha has a 32 percent marginal tax rate, in which bond should she invest? What interest rate offered by Moe's, Incorporated would make Namratha indifferent between investing in the two bonds?

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The Answer of Namratha has the choice between investing in a city of Watkinsville bond at 4.5 percent or a Moe's, Incorporated bond at 7 percent. Assuming that both bonds have the same nontax characteristics and that Namratha has a 32 percent marginal tax rate, in which bond should she invest? What interest rate offered by Moe's, Incorporated would make Namratha indifferent between investing in the two bonds?

Namratha Has the Choice Between Investing in a City of Watkinsville