11. A $800,000 face value bond with interest of 6% per annum payable semiannually in arrears, will be redeemed at par, by annual installments of $20,000, $40,000, $60,000, $80,000, $20,000, $40,000, $60,000, $80,000, and so on until the whole loan is repaid. The first annual installment will be made at the end of the 5th year. An investor who is liable to income tax at 30% on interest and to capital gains tax at 30% purchases the entire loan on the issue date. (a) Calculate the price at which the investor can obtain an effective yield of 7% per annum after tax. [6 marks] (b) Immediately after the 8th interest payment, the investor sells the entire loan at a price of $700,000. Using linear interpolation in interest tables, calculate the net effective yield per annum, after tax, obtained on the complete transaction by the investor. [6 marks] [Total: 12 marks]