Annual cash flow from a new investment is projected to be: As the year 1 through 4 cash flows are realized it is anticipated that they will be invested in treasury bonds paying 14% annual interest and maturing at year 4. Calculate the DCFROR on the investment, assuming a 42% income tax rate is relevant and that after-tax treasury bond interest will be reinvested each year in identical bonds. Annual cash flow from a new investment is projected to be: As the year 1 through 4 cash flows are realized it is anticipated that they will be invested in treasury bonds paying 14% annual interest and maturing at year 4. Calculate the DCFROR on the investment, assuming a 42% income tax rate is relevant and that after-tax treasury bond interest will be reinvested each year in identical bonds. A) 26.12% B) 28.86% C) 25.33% D) 27.19% Solution The correct answer is: B) 28.86% .