Mrs. James plans to invest in one of two investment alternatives having the same risk. Investment 1 has a before-tax return of 10% and the income from investment 1 would be taxed at Mrs. James' 35% regular tax rate. Investment 2 has a before-tax return of 8% and the income from investment 2 would be taxed at a 15% preferential rate. Which of the following statements regarding these investment choices is false? The after-tax rate of return on investment 2 is 6.8%. Mrs. James should choose investment 1. Investment 2 bears implicit tax relative to investment 1. The after-tax rate of return on investment 1 is 6.5%.