$4.$ You buy a bond that pays annual interest payments of $7\%$ of the bond$$s face value of $$1000.$

You initially pay $$1020$ for the bond. You receive an annual interest payment after one year, then sell the bond for $$1100.$ What is your total rate of return on the investment, expressed as a percentage of the purchase price?

$5.$ Suppose the interest rate on a taxable corporate bond is $5$ percent while a municipal, tax exempt bond has an interest rate of $3\mathrm{.}4$ percent, and they are similar in every other way.

a$.$ Assuming the income tax rate is $30$ percent, calculate the after tax interest rate on the corporate bond. Is it higher or lower than the after tax return on the municipal bond?

b$.$ What is the income tax rate that equalizes the after tax return between the corporate bond and the municipal bond?