Determine the after-tax yield

Reference no: EM131506384

Question: Determine the after-tax yield (i.e., IRR on the ATCF) obtained by an individual who purchases a $10,000, 10-year, 10% nominal interest rate bond. The following information is given:

• 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 $9,000.

• All revenues (including capital gains) are taxed at an income rate of 28%.

• The bond is held to maturity.

Reference no: EM131506384

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