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Find the net proceeds from the sale of the bond

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Reference no: EM133015521

Question - Currently, Warren Industries can sell 15-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.

Find the net proceeds from the sale of the bond.

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

Use the approximation formula to estimate the before-tax and after-tax costs of debt.

Reference no: EM133015521

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