Which is better investment, 4% stock at per with an income tax at the rate of 5 paise per rupee or 4 1/ 2% stock at 110 free from income tax?

Let investment in each case be Rs. (100 x 110)
Gross income from 4% stock = Rs. (4/100) x (100 x 110) = Rs. 440
Net income from the stock = Rs. (440 - 22) = Rs. 418
Net income from 4¹/₂% stock = Rs. (9 x 100 x 110) / (2 x 110) = Rs. 450
∴ Better stock is 4¹/₂% at 110.