Problem 14-31 A newly issued bond pays its coupons once annually. Its coupon rate is 5.7%, its maturity is 20 years, and its yield to maturity is 8.5%. a. Find the holding-period return for a 1-year investment period if the bond is selling at a yield to maturity of 7.5% by the end of the year. (Do not round intermediate calculations. Round your answer to 2 decimal places.) Answer is complete and correct. Holding-period 19.42% return b. If you sell the bond after one 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. (Do not round intermediate calculations. Round your answers to 2 decimal places.) Answer is complete and correct. Tax on interest income $ 24.99 24.07 Tax on capital gain $ Total taxes $ 49.06 c. What is the after-tax holding-period return on the bond? (Do not round intermediate calculations. Round your answer to 2 decimal places.) Answer is complete and correct. After-tax holding-period return 12.74 % d. Find the realized compound yield before taxes for a 2-year holding period, assuming that (1) you sell the bond after two years, (2) the bond yield is 7.5% at the end of the second year, and (3) the coupon can be reinvested for one year at a 3% interest rate. (Do not round intermediate calculations. Round your answer to 2 decimal places.) Answer is complete and correct. Realized compound yield before taxes 13.18 % e. Use the tax rates in (b) above to compute the after-tax 2-year realized compound yield. Remember to take account of OID tax rules. (Do not round intermediate calculations. Round your answer to 2 decimal places.) X Answer is complete but not entirely correct. After-tax 2-year realized compound yield 6.00 X %