Currently, Warren industries can sell 20-year, $1,000 par value bonds paying annual interest at a 15% coupon rate. As a result of current interest rates, the bonds can be sold for $1,050 each; flotation cost of $20 per bond will be incurred in this process. The firm is in the 28% tax bracket.

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

b. Calculate 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