PART II: Multi$-$Part Short Answer. Use the information below to answer the following

questions. Write your answers in the space provided.

PART A $(8$ marks$)$

Recently, April purchased a bond for $$23,150$ that pays a $8\%$ coupon, payable quarterly. The

bond matures in $6$ years at a par value of $$25,000.$ She can reinvest the quarterly coupon at

$3\mathrm{.}5\%$ compounded annually. Her salary is $$73,000$ per year. Her marginal tax rate is $40\%,$ which

is also the applicable tax rate on interest income. The tax rate on dividend income is $22\%$ and

the tax rate on capital gain income is $20\%$ HINT. The first $2$ questions below are before$-$tax, the

last one is after$-$tax.

Show$/$Hide $$

How much coupon income will April receive each quarter? Over $6$ years? $(2$ marks$)$

What is her annualized HPR before$-$tax if she does not reinvest her investment income?

$(2$ marks$)$

What is her annualized HPR before$-$tax if she reinvests her investment income? $(2$ marks$)$

What is her annualized HPR after$-$tax if she reinvests her investment income and taxes are

paid annually? $(2$ marks$)$