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Unformatted text preview: Answer: Aftertax return income at t = 27%: Exxon = 0.10($5,000)  (0.10)($5,000)(0.27) = $365. California = 0.07($5,000)  $0 = $350. Alternatively, calculate aftertax yields: AT yield Exxon = 10.0%(1  t) = 10%(1  0.27) = 7.3%. AT yield Calif. = 7.0%. At what marginal tax rate would you be indifferent? 7.0% = 10.0%(1  t). Solve for t. 7.0% = 10.0%  10.0%(t) 10.0%(t) = 3% t = 30%....
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 Spring '08
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