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23-10-2020
Business

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Assume that Marsha is indifferent between investing in a city of Destin bond that pays 6 percent interest and a corporate bond that pays 8 percent interest. What is Marsha's marginal tax rate

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23-10-2020

Answer:

25%

Explanation:

As, per the given situation, the computation of marginal tax rate is shown below:-

Tax rate = 1 - (Interest ÷ Tax rate)

= 1 - (6% ÷ 8%)

= 1 - 75%

= 25%

Therefore for computing the marginal tax rate we simply applied the above formula.

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