Currently, Warren Industries can sell 10 year, $1000-par-value bonds paying annual interest at a 8% coupon rate. Because current market rates for similar bonds are just under 8%, Warren can sell its bonds for $1010 each; Warren will incur flotation costs of $35 per bond. The firm is in the 29% 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.