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A taxpayer is considering buying a fully taxable corporate bond (5 year maturity), yielding 6% annual returns (compounded and payable annually)and a face value of
A taxpayer is considering buying a fully taxable corporate bond (5 year maturity), yielding 6% annual returns (compounded and payable annually)and a face value of $1,000. The taxpayer requires a 6% AFTER-TAX yield and faces a 21% tax rate. What PRICE is the investor willing to pay to earn the required 6% after tax return? Please enter your response in dollars and cents and no "$" sign or commas ($1,143.23 = 1143.23). Note that this is the Present Value (PV) of the bond at the YTM required for the after-tax return to be 6%.
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