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An investor wishes to gain a yield, after tax, of at least 5 % per annum. The investor is subject to income tax at a

An investor wishes to gain a yield, after tax, of at least 5% per annum. The investor is subject to income tax at a rate of 25% and CGT tax at a rate of 35%. Calculate the maximum ex-dividend price that the investor should pay on the 1st Jun 1998 for 10,000 of loan stock redeemable at 110% on 1st of Jul 2020. Interest is payable quarterly in arrears at the rate of 4% per annum, with the next coupon date being on the 1st of July 1998.

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