You buy a 10-year $1,000 par value 4% annual-payment coupon bond priced to yield 6%. You do not sell the bond at year-end. If you are in a 15% tax bracket, at year-end you will owe taxes on this investment equal to ________.

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P₁₀= 40 11eaaae8_8b5d_8dba_a4b8_1d262f6fbba1_TB6474_11 + 11eaaae8_8b5d_8dbb_a4b8_8b81c1b4ba25_TB6474_11 = $852.80 P₉ = 40 11eaaae8_8b5d_8dbc_a4b8_a38756d60fbb_TB6474_11 + 11eaaae8_8b5d_8dbd_a4b8_e93fe029f0b5_TB6474_11 = $863.97 Calculator entries for this year's price are N = 10, I/Y = 6, PMT = 40, FV = 1,000, CPT PV → 852.80 Calculator entries for next year's price are N = 9, I/Y = 6, PMT = 40, FV = 1,000, CPT PV → 863.97 Taxes owed are ($863.97 − $852.80 + $40)(.15) = $7.68

You Buy a 10-Year $1,000 Par Value 4% Annual-Payment Coupon