Data:

You paid $1,000 for a Boston Scientific bond at the end of the previous year. At the end of last year, the bond was worth $1,050. You are in the 25-percent federal marginal tax rate, and you live in a state that has no state income tax. Over the course of last year, you received $40 in coupon interest payments.

Calculations:

a. What was your before-tax return for the bond?

b. What is your after-tax return assuming you did not sell the bond