On April 24, 2020, obtained the following information on bonds of A Limited: Par value = $1,000, coupon rate 5.75%, maturity date = January 1, 2025, interest payment dates = January 1, July 1.

1. Suppose on April 24, 2020, you purchased this bond in the market and held this bond for exactly one year (till April 24, 2021). The yield on this bond on April 24, 2021 was 2.25% and you decided to sell the bond. Assume you face 32% marginal tax rate and that 50% of capital gains are taxable. Assume also that coupon interest payments can be reinvested at the annual yield of 3%.

1Determine your gross income and gross return from your investment.

2Determine your net income and net return from your investment