Ms. Pay, who has a 40.8 percent marginal tax rate on interest income (37 percent...
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Accounting
Ms. Pay, who has a 40.8 percent marginal tax rate on interest income (37 percent income tax + 3.8 percent Medicare contribution tax), owns HHL corporate bonds in her investment portfolio. She earned $74,800 interest this year on her HHL bonds. Compute her after-tax cash flow assuming that
She received two semiannual cash payments of $37,400 each.
She instructed HHL to reinvest her interest payments in additional bonds.
The entire $74,800 represented amortization of OID.
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