Determine the after-tax yield (i.e., IRR on the ATCF) obtained by an individual who purchases a $12,000, 10-year, 10% nominal interest rate bond. Given that interest is paid semi-annually, and the bond was bought after the fifth payment had just been received by the previous owner. The purchase price for the bond was $8,000. All revenues (including capital gains) are taxed at an income rate of 28%. The bond is held to maturity. Give answer to 2 d.p and please don't use excel.
Determine the after-tax yield (i.e., IRR on the ATCF) obtained by an individual who purchases a $12,000, 10-year, 10% nominal interest rate bond. Given that interest is paid semi-annually, and the bond was bought after the fifth payment had just been received by the previous owner. The purchase price for the bond was $8,000. All revenues (including capital gains) are taxed at an income rate of 28%. The bond is held to maturity. Give answer to 2 d.p and please don't use excel.
Chapter4: Gross Income: Concepts And Inclusions
Section: Chapter Questions
Problem 29P
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Determine the after-tax yield (i.e., IRR on the ATCF) obtained by an individual who purchases a $12,000, 10-year, 10% nominal interest rate bond.
Given that interest is paid semi-annually, and the bond was bought after the fifth payment had just been received by the previous owner. The purchase price for the bond was $8,000. All revenues (including capital gains) are taxed at an income rate of 28%. The bond is held to maturity.
Give answer to 2 d.p and please don't use excel.
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