C. Use the approximation formula to estimate, the before tax cost of debt is what %?

Use the approximation formula to estimate , the after tax cost of debt is what %?

Cost of debt using both methods (YTM and the approximation formula) Currently, Warren Industries can sell 15-year, $1,000-par-value bonds paying annual interest at a 13% coupon rato. As a result of current interest rates, the bonds can be sold for $1,020 each before incurring flotation costs of $30 per bond. The firm is in the 35% tax bracket a. Find the net proceeds from the sale of the bond, Ng b. Calculate the bond's yield to 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, Ng, is $990. (Round to the nearest dollar) b. Using the bond's YTM, the before-tax cost of debt is 13.16 %. (Round to two decimal placer) Using the bond's YTM, the after-tax cost of debt is 8.55 % (Round to two decimal places.) c. Using the approximation formula, the before-tax cost of debt is OK (Round to two decimal places)