A newly issued bond pays its coupons once annually. Its coupon rate is 5%, its maturity is 20 years, and its yield to maturity is 8%, and its face value is $1,000.

a. Find the holding-period return for a 1-year investment period if the bond is selling at a yield to maturity of 7% by the end of the year. (Round your answer to 2 decimal places.)

b. If you sell the bond after 1 year, what taxes will you owe if the tax rate on interest income is 40% and the tax rate on capital gains income is 30%? The bond is subject to original-issue discount tax treatment. (Round your answer to 2 decimal places.)

c. What is the after-tax holding-period return on the bond? (Round your answer to 2 decimal places.)