Question: David Abbot is interested in purchasing a bond issued by Sony. He has obtained the following information on the security: Par Value: $1,000 Cost: $920

David Abbot is interested in purchasing a bond issued by Sony. He has obtained the following information on the security: Par Value: $1,000 Cost: $920 Coupon rate: 7.5% Years to maturity: 10 Tax Bracket 35%.

a. Calculate the before tax cost of the Sony bond using the Yield to Maturity

b. Calcluate the after-tax-cost of the Sony given David's tax bracket.

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