Question: PART II (Multi-Part Short Answer. Use the information below to answer the followingquestions.SHOW YOUR CALCULATION!) PARTA(10 marks) Recently, April purchased a bond for $23,150 that

PART II (Multi-Part Short Answer. Use the information below to answer the followingquestions.SHOW YOUR CALCULATION!)

PARTA(10 marks)

Recently, April purchased a bond for $23,150 that pays a 6% coupon, payable semi-annually.Thebondmaturesin6yearsataparvalueof$25,000.She canreinvestthesemi-annualcoupon at 3.5% compounded annually. Her salary is $73,000 per year. Her marginal tax rate is40%, which is also the applicable tax rate on interest income. The tax rate on dividend income is22% and the tax rate on capital gain income is 20%. HINT: The first 2 questions below arebefore-tax, thelastoneis after-tax.

WhatisherannualizedHPRbefore-taxifshedoesnotreinvestherinvestment income?
WhatisherannualizedHPRbefore-taxifshereinvestsherinvestment income?
What is her annualized HPRafter-taxif she reinvestsher investment income and taxes arepaidannually?

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