It can invest in tax-exempt bonds that pay 45 percent


A corporation is in the 34 percent tax bracket. It has $1,000,000 in excess cash that it plans to hold and invest for future expansion of its facilities. It can invest in tax-exempt bonds that pay 4.5 percent interest or it can invest in taxable bonds that pay 6 percent interest. Which investment should the corporation make?

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Financial Accounting: It can invest in tax-exempt bonds that pay 45 percent
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