## This Post Has One Comment

1. bhenley says:

Anne’s after-tax rate of return from the corporate bond is 3.5% or 5% x (1-.3). Because interest from the bond is taxed annually and her rate is assumed to be constant, the after-tax rate of return doesn’t depend on her investment horizon. Thus, her annual after-tax rate of return remains at 3.5% if the bond matures in ten years.

Step-by-step explanation: