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Need help with B and C please. Can't figure out what I did wrong on part B so please include explanations for B and C
Need help with B and C please. Can't figure out what I did wrong on part B so please include explanations for B and C so I can figure out what I did wrong.
Cost of debt using both methods (YTM and the approximation formula) Currently, Warren Industries can sell 15-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 $1,070 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. a. The net proceeds from the sale of the bond, Nd, is $ 1035. (Round to the nearest dollar.) b. Using the bond's YTM, the before-tax cost of debt is 2.88 %. (Round to two decimal places.)Step by Step Solution
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