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An investor purchases a 30-year U.S. government bond for $840. The bond’s coupon rate is 10...

An investor purchases a 30-year U.S. government bond for $840. The bond’s coupon rate is 10 percent and, it still had twelve years remaining until maturity. If the investor holds the bond until it matures and collects the $1000 par value from the Treasury and his marginal tax rate is 25 percent (we assume that the bond is taxable), what will be his after-tax (effective) yield to maturity?

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ANSWER IN THE IMAGE((YELLOW HIGHLIGHTED). FEEL FREE TO ASK ANY DOUBTS. THUMBS UP PLEASE.

bonds Coupon & Face value both are taxable at 25%, and its a semi-annual coupon paying bond.

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