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Regular Coupon Bond

0 1 2 3

12%

Bond cost -1000.00

Call price 1060.00

Interest 120.00 120.00 120.00

Taxes (28%) -33.60 -33.60 -50.40

Cash flow -1000.00 86.40 86.40 1129.60

IRR = After tax YTC = 9.95%.

(Higher because of higher call premium.)

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