Find the net proceeds from the sale of the bond and nd

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Cost of debt using both methods (YTM) Currently, Warren Industries can sell 20-year, $1,000-par-value bonds paying annual interest at a 9 % coupon rate. As a result of current interest rates, the bonds can be sold for $960 each before incurring flotation costs of $25 per bond. The firm is in the 40 % 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.

a. The net proceeds from the sale of the bond, 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.)

Reference no: EM131886333

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