At the lower yield, the bond price will be $631.67 [ n 29, i 7%, FV $1,000,
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At the lower yield, the bond price will be $631.67 [ n 29, i 7%, FV $1,000, PMT $40] .
Therefore, total after-tax income is Coupon $40 (1 0.38) $24.80 Imputed i nterest ($553.66 $549.69) (1 0.38) 2.46 Capital g ains ($631.67 $553.66) (1 0.20) 62.41 Total inc ome a fter t axes: $89.67 Rate of re turn 89.67/549.69 .163 16.3%
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Related Book For
Essentials Of Investments
ISBN: 9780697789945
8th Edition
Authors: Zvi Bodie, Alex Kane, Alan J. Marcus
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