Cost of debt using both methods (YTM and the approximation formula) Currently, Warren Industries can sell 20-year, $1,000-par-value bonds paying annual interest at a 15% coupon rate. Because current market rates for similar bonds are just under 15%, Warren can sell its bonds for $1,100 each; Warren will incur flotation costs of $20 per bond. The firm is in the 26% 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.

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

(Round to the nearest dollar.)

b.Using the bond's YTM, the before-tax cost of debt is

(Round to two decimal places.)

c. Using the bond's YTM, the after-tax cost of debt is

(Round to two decimal places.)

d.Using the approximation formula, the before-tax cost of debt is

(Round to two decimal places.)

e) Using the approximation formula, the after-tax cost of debt is

(Round to two decimal places.)