Question
When a certain type of bond matures, the bondholder is subject to a tax of 25% of the amount of discount at which he bought
When a certain type of bond matures, the bondholder is subject to a tax of 25% of the amount of discount at which he bought the bond.
A $1,000 bond of this type has 4% annual coupons and is redeemable at par in 10 years.No tax is payable on the coupons.
What price should a purchaser pay if he is to realize an annual yield of 5% after taxes?
(A) $903
(B) $910
(C) $923
(D) $942
(E) $975
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Mergers, Acquisitions and Other Restructuring Activities
Authors: Donald DePamphilis
8th edition
9780128024539, 128013907, 978-0128013908
