A corporation has an average tax rate of 25% and a marginal tax rate of 39%. T

A corporation has an average tax rate of 25% and a marginal tax rate of 39%. The corporation can invest in a tax-free project with an expected before-tax
return of 6.8% or in a taxable project with an expected before-tax return of 10%. The corporation should

a. Invest in the taxable project because the return is greater.

b. Be indifferent between the two investments because the after-tax returns are the same.

c. Invest in the tax-free project because the after-tax return is greater.

d. Invest in the taxable project because the after-tax return is greater.