Question: 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 14% coupon

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 14% coupon rate. Because current market rates for similar bonds are just under 14%, Warren can sell its bonds for $1,060 each; Warren will incur flotation costs of $35 per bond. The firm is in the 26% 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 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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