Suppose you are an investor with a choice between three investments in debt securities that are identical in every way except in terms of their interest rates and taxability.
Investment A: $\quad $Interest rate 10 percent, tax rate 40 percent of interest income
Investment B:$\quad $ Interest rate 8 percent, tax rate 30 percent of interest income
Investment C: $\quad $Interest rate 6.5 percent, tax rate 0 percent
Which investment provides the highest after-tax return? Show your work.

Question

Suppose you are an investor with a choice between three investments in debt securities that are identical in every way except in terms of their interest rates and taxability.
Investment A: $\quad $Interest rate 10 percent, tax rate 40 percent of interest income 
Investment B:$\quad $ Interest rate 8 percent, tax rate 30 percent of interest income 
Investment C: $\quad $Interest rate 6.5 percent, tax rate 0 percent
Which investment provides the highest after-tax return? Show your work.

Quizplus · Accepted Answer

The Answer of Suppose you are an investor with a choice between three investments in debt securities that are identical in every way except in terms of their interest rates and taxability.
Investment A: $\quad $Interest rate 10 percent, tax rate 40 percent of interest income 
Investment B:$\quad $ Interest rate 8 percent, tax rate 30 percent of interest income 
Investment C: $\quad $Interest rate 6.5 percent, tax rate 0 percent
Which investment provides the highest after-tax return? Show your work.

Suppose You Are an Investor with a Choice Between Three \quad

Suppose You Are an Investor with a Choice Between Three $\quad$