Suppose you purchased a bond with 30-year maturity and 4 percent coupon paid annually. The interest rate was originally 10 percent and fell to 9 percent a year later. The income tax rate is 36 percent and the tax on the capital gain is 20 percent. If you sold this bond a year later:
a. Compute the initial price of the bond.
b. Compute the amount of taxes you will have to pay.
c. Compute the holding period of return for this investment.