Question: Using the information in problem 26, calculate your after-tax rate of return on your bond investment assuming that your marginal tax rate is 35%. You

Using the information in problem 26, calculate your after-tax rate of return on your bond investment assuming that your marginal tax rate is 35%. You pay tax on the interest when it is received.
a. All coupons were immediately spent when received.
b. All coupons were reinvested in your bank account, which pays 1% interest until the bond is sold.
c. All coupons were reinvested at 8.64% until the bond is sold.

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a Annual aftertax coupon 1 35 08 1000 52 Total coupons received after 5 years 5 52 260 Capita... View full answer

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