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 11% coupon rate. Because current market rates for similar bonds are just under 14%, Warren can sell its bonds for $960 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, Upper N Subscript dNd.

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.

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A. The net proceeds from the sale of the bond, Upper Nd, is $____. (Round to the nearest dollar.)

B. Using the bond's YTM, the before-tax cost of debt is ____%. (Round to two decimal places.)

Using the bond's YTM, the after-tax cost of debt is _____%. (Round to two decimal places.)

C. Using the approximation formula, the before-tax cost of debt is ______%. (Round to two decimal places.)

Using the approximation formula, the after-tax cost of debt is _____%(Round to two decimal places.)