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Recently, April purchased a bond for $ 2 3 , 1 5 0 that pays a 8 % coupon, payable quarterly. The bond matures in

Recently, April purchased a bond for $23,150 that pays a 8% coupon, payable quarterly. The bond matures in 6 years at a par value of $25,000. She can reinvest the quarterly coupon at 3.5% compounded annually. Her salary is $73,000 per year. Her marginal tax rate is 40%, which is also the applicable tax rate on interest income. The tax rate on dividend income is 22% and the tax rate on capital gain income is 20%. HINT: The first 2 questions below are before-tax, the last one is after-tax.
1. What is her annualized HPR before-tax if she does not reinvest her investment income?
2. What is her annualized HPR before-tax if she reinvests her investment income?
3. What is her annualized HPR after-tax if she reinvests her investment income and taxes are paid annually?

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