Answer:
6.6%
Step-by-step explanation:
We find the cost of the bond. Yield to maturity is the yield for bond holder but cost for the issuer like Easy Slider.
Formula is
P=CP(1-(1+x)^-n)/x + FV/(1+x)^n
where P is the price of bond in the market. So, the selling price of Easy Slider Inc bond is 928
CP= coupon payment. Here, CP is 10% of 1000. So, $100
FV= Face value. Here, FV is $1000
n= maturity of the bond. Here, n=15
x= cost of the bond before tax
putting the value in the equation
928=100(1-(1+x)^-15)/x + 1000/(1+x)^15
solving for x, we get 0.1100
Now, if we find out after tax then
0.1100(1-T)= After tax cost
0.1100(1-0.4)
0.066 or 6.66%
