Tech Inc. (HUM), a for-profit health care company who offers a range of insurance products and health and wellness services, recently issued bonds with a yield of 6%. Sam Hospital, a not-for profit health care enterprise, issued bonds of equal risk with a yield of 4%. 1). at what tax rate would an investor be indifferent between these two bonds? 2). which bond should an investor in the 30% tax bracket invest in? Please type answer and show work.
A. 33.3%, Sam Hospital’s
B. 50.0% Tech Inc
C. 50.0% Sam Hospital’s
D. 33.3%, Tech Inc