Cost of debt using both methods (YTM and the approximation formula) Currently, Warren Industries can sell 15 dash year, $1,000-par-value bonds paying annual interest at a 7% coupon rate.Because current market rates for similar bonds are just under 7%, Warren can sell its bonds for $1,010 each; Warren will incur flotation costs of $30 per bond.The firm is in the 21% tax bracket.

a. Find the net proceeds from the sale of the bond, Upper N Subscript d.

b. Calculate the bond's yield to maturity (YTM) to estimate the before-tax and after-tax costs of debt.

a. The net proceeds from the sale of the bond, Nd, is $

_______g.(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.)