What interest rate does surething, inc., need to offer


Hugh has the choice between investing in a City of Heflin bond at 13.50 percent or a Surething, Inc. bond (rate undetermined). Assume both bonds have the same nontax characteristics and that Hugh has a 33 percent marginal tax rate. What interest rate does Surething, Inc., need to offer to make Hugh indifferent between investing in the two bonds?

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