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Hugh has the choice between investing in a City of Heflin bondat 4.95 percent or...

Hugh has the choice between investing in a City of Heflin bond at 4.95 percent or investing in a Surething bond at 7.60 percent. Assuming that both bonds have the same nontax characteristics and that Hugh has a 40 percent marginal tax rate, what interest rate does Surething Inc., need to offer to make Hugh indifferent between investing in the two bonds? (Round your answer to 2 decimal places.)

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Answer #1

Answer:

Interest rate: 8.25%

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