Question: Determine the after-tax yield (i.e., IRR on the ATCF) obtained by an individual who purchases a $10,000, 10-year, 10% nominal interest rate bond. The following information is given:
• Interest is paid semi-annually, and the bond was bought after the fifth payment had just been received by the previous owner.
• The purchase price for the bond was $9,000.
• All revenues (including capital gains) are taxed at an income rate of 28%.
• The bond is held to maturity.