Find the net proceeds from the sale of the bond

Reference no: EM131965141

Question: Currently, Warren Industries can sell 20-year ,$1,000 -par-value bonds paying annual interest at a 13 % coupon rate. As a result of current interest rates, the bonds can be sold for $1,030 each before incurring flotation costs of $20 per bond. The firm is in the 30 % 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.

Reference no: EM131965141

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