Cost of debt using both methods(YTM and the approximationformula)

Currently, Warren Industries can sell 15-year $1,000-par-value bonds paying annual interest at a 13% coupon rate. As a result of current interestrates, the bonds can be sold for $980 each before incurring flotation costs of $35 per bond. The firm is in the 30% tax bracket.

a.Find the net proceeds from the sale of thebond,

b.Calculate thebond's yield to maturity(YTM) to estimate thebefore-tax andafter-tax costs of debt.

c.Use the approximation formula to estimate thebefore-tax andafter-tax costs of debt.