||The Lynch Bull investment company suggests that Steven Comstock, a wealthy New York City investor (his incremental income tax rate is 38.6%), consider the following investment. Buy corporate on the New York Stock Exchange with a (par value) of $100,000 and a 5% rate (the pay 5% of $100,000, which equals $5000 interest per year). These can be purchased at their present market value of $75,000. At the end of each year, Steve will receive the $5000 interest, and at the end of 5 years, when the mature, he will receive $100,000 plus the last $5000 of interest. Steve will pay for the by borrowing $50,000 at 10% interest for 5 years. The $5000 interest paid on the loan each year will equal the $5000 of interest income from the As a result Steve will have no net taxable income during the five years due to this bond purchase and borrowing money scheme. At the end of 5 years, Steve will receive $100,000 plus $5000 interest from the and will repay the $50,000 loan and pay the last $5000 interest. The net result is that he will have a $25,000 capital gain; that is, he will receive $100,000 from a $75,000 investment. This situation represents an actual recommendation of a brokerage firm. (a) Compute Steve’s after-tax rate of return on this dual bond-plus-loan investment package. (b) What would be Steve’s after-tax rate of return if he purchased the for $75,000 cash and did not borrow the $50,000?