You are considering the purchase of one of two different investments. Investment A is tax exempt and pays 6%. Investment B is taxable and pays 8.33%
You live in a state that imposes no income taxes and are in a 28% federal tax bracket and want to earn the highest after tax return possible. Which of the following is true? (round to two decimal places)
A) Investment A is preferred.
B) Investment B is preferred.
C) Investments A and B have identical after tax yields.
D) Investments A and B have identical APYs.
E) Not enough information has been provided.
Answer: C
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