Engineering Economy 7th Edition by Leland Blank ,Anthony Tarquin

Exercise 59

An investor who purchased a $10,000 mortgage bond today paid only $6000 for it. The bond coupon rate is 8% per year, payable quarterly, and the maturity date is 18 years from the year of issuance. Because the bond is in default, it will pay no dividend for the next 2 years. If the bond dividend is in fact paid for the following 5 years (after the 2 years) and the investor then sells the bond for $7000, what rate of return will be realized (a) per quarter and (b) per year (nominal)