Compute the initial price of the bond

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Reference no: EM131583444

Suppose you purchased a bond with 30-year maturity and 4 percent coupon paid annually. The interest rate was originally 10 percent and fell to 9 percent a year later. The income tax rate is 36 percent and the tax on the capital gain is 20 percent. If you sold this bond a year later:

a. Compute the initial price of the bond.

b. Compute the amount of taxes you will have to pay.

c. Compute the holding period of return for this investment.

Reference no: EM131583444

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