1. The Wesson Wisconsin State Bank has purchased a bank-qualified municipal bond with a coupon rate of 7.5%. The bank had to borrow funds to make this purchase at a cost of 6%. The bank is in the 25% tax bracket. What is the net after-tax return on this bank-qualified municipal bond?
A. 7.5%
B. 2.7%
C. 3.0%
D. 1.5%
E. None of the options is correct
2. In a break-even analysis, an increase in variable cost per unit:
a) increases contribution margin
b) decreases marginal costs
c) raises an organization's break-even quantity
d) has no impact on the break-even calculation