#8

Cost of debt using both methods (YTM and the approximation formula) Currently, Warren Industries can sell 20-year, $1,000-par-value bonds paying annual interest at a 15% coupon rate. Because current market rates for similar bonds are just under 15%, Warren can sell its bonds for $1,090 each; Warren will incur flotation costs of $35 per bond. The firm is in the 28% tax bracket. a. Find the net proceeds from the sale of the bond, Nd. b. Calculate the bond's yield to maturity (YTM) to estimate the before-tax and afler-tax costs of debt. c. Use the approximation formula to estimate the before-tax and after-tax costs of debt. a. The net proceeds from the sale of the bond, Nd, is $ (Round to the nearest dollar.) Cost of debt using both methods (YTM and the approximation formula) Currently, Warren industries can sell 10 -year, $1,000parvalue bonds paying annual interest at a 11% coupon rate. Because current market rates for similar bonds aro just under 11%, Warren can sell its bonds for $1,020 each; Warren will incur flotation costs of $35 per bond. The firm is in the 27% tax bracket. a. Find the net proceeds from the sale of the bond, Nd. b. Calculate the bond's yield fo maturity (YTM) to estimate the before-tax and after-tax costs of debt. c. Use the approximation formula to estimate the before-tax and after-tax costs of debt. a. The net proceeds from the sale of the bond, Nd is s (Round to the nearest doliar.)