Daniel plans to invest 20000 in either a corporate bond


Question: Daniel plans to invest $20,000 in either a corporate bond paying 5% or a tax-exempt bond with a 4% interest rate. The bonds have an equivalent level of risk. Daniel has a 33% marginal tax rate and wants to maximize his after-tax earnings. Daniel should choose which option and why?

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Accounting Basics: Daniel plans to invest 20000 in either a corporate bond
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