1. A bank is considering some investment portfolio shifting. In doing so, the bank is considering selling $70 million in 5-year county-government bonds with a coupon interest of 3 percent, and purchase $70 million in 5-year city government bonds with a coupon interest of 4 percent issued at par. The local bonds being sold are listed at par on the banks books but they have a current market value of $68 million.

Assume that the banks corporate income tax rate is 20 percent.

1. Calculate the dollar income tax impact for the current year. (3 points)