Cost of debt using both methods (YTM and the approximation formula)Currently, Warren Industries can sell 20 dash year, $1000-par-value bonds paying annual interest at a 9% coupon rate. Because current market rates for similar bonds are just under 9%, Warren can sell its bonds for $950 each; Warren will incur flotation costs of $20 per bond. The firm is in the 25% 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.

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