Principles of Finance Practical Sale of a Bond Date 1) Sale of bond $1,000-N N+$1,000 Trax (1-T) Net proceeds from the sale of debt (bond) number of years to the band's maturity Finance Corporation, a manufacturer, is contemplating selling $10 million worth of 20- year, 9% coupon (stated annual interest rate) bonds, each with a par value of $1,000. Because bonds with similar risk earn returns greater than 9%, the firm must sell the bonds for $980 to compensate for the lower coupon interest rate. The flotation costs are 2% of the par value or face value of the bond. Finance Corporation has a 42% tax rate. A) Calculate net proceeds from sale of each bond (5pts) B) Calculate before tax cost of debt (5pts) C) Calculate after-tax cost of debt (5pts)