Curtis invests $225,000 in a city of Athens bond that pays 4.25% interest. Alternatively, Curtis could have
invested the $225,000 in a bond recently issued by Initech, Inc. that pays 5.50% interest with similar risk as the city of Athens bond. Assume that Curtis’s marginal tax rate is 24%.
How much implicit tax would Curtis pay on the city of Athens bond?
- None of the choices are correct.