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Business, 31.10.2019 03:31 StephanieQueen2003

Elizabeth, an individual taxpayer, has a marginal tax rate on ordinary income of 24% and a tax rate on long-term capital gains of 15%. she has $100,000 that she wants to invest for the next 6 months, at which time she will liquidate the investment. she is considering three investment alternatives: (1) a corporate bond yielding an annual interest rate of 5%; (2) a municipal bond that pays and annual interest rate of 3%; (3) stock that will pay a dividend of $1000 and is expected to increase in value by 2% per year. assume that elizabeth can purchase the stock after the declaration date but before the record date, and that all interest and dividends will be received at the end of the 6 month period. which investment alternative should elizabeth choose? show your calculations.

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