David Abbot is interested in purchasing a bond issued by Sony. He has obtained the following information on the security:
SONY BOND
Par Value $1000 Coupon Interest Rate 6% Tax bracket 20%
Cost $ 930 Years to maturity 10
Answer the following questions.
a. calculate the before-tax cost of the Sony bond.
b. Calculate the after-tax cost of the Sony bond given David's tax bracket.