Dak invests $250,000 in a city of Starkville bond that pays…
Dak invests $250,000 in a city of Starkville bond that pays 7 percent interest. Alternatively, Dak could have invested the $250,000 in a corporate bond recently issued by Cowboys, Inc. that pays 9 percent interest with similar risk as the city of Starkville bond. Assume that Dak’s marginal tax rate is 24 percent.What is Dak’s after-tax rate of return on the city of Starkville bond?