P9-2: cost of debt using both methods currently, warren industries can sell 15-year, $1,000-par-value bonds paying annual interest at a 7% coupon rate. because cur-rent market rates for similar bonds are just under 7%, warren can sell its bonds for $1,010 each; warren will incur flotation costs of $30 per bond in this process. the firm is in the 40% tax bracket. a. find the net proceeds from sale of the bond, nd. b. show the cash flows from the firm’s point of view over the maturity of the bond. c. calculate the before-tax and after-tax costs of debt. d. use the approximation formula to estimate the before-tax and after-tax costs of debt. e. compare and contrast the costs of debt calculated in parts c and d. which approach do you prefer? why?

Lavage rapide is a canadian company that owns and operates a large automatic car wash facility near montreal. the following table provides data concerning the company’s costs: fixed cost per month cost per car washed cleaning supplies $ 0.70 electricity $ 1,400 $ 0.07 maintenance $ 0.15 wages and salaries $ 4,900 $ 0.30 depreciation $ 8,300 rent $ 1,900 administrative expenses $ 1,400 $ 0.03 for example, electricity costs are $1,400 per month plus $0.07 per car washed. the company expects to wash 8,000 cars in august and to collect an average of $6.50 per car washed. the actual operating results for august appear below. lavage rapide income statement for the month ended august 31 actual cars washed 8,100 revenue $ 54,100 expenses: cleaning supplies 6,100 electricity 1,930 maintenance 1,440 wages and salaries 7,660 depreciation 8,300 rent 2,100 administrative expenses 1,540 total expense 29,070 net operating income $ 25,030 required: calculate the company's revenue and spending variances for august.

Camilo is a self-employed roofer. he reported a profit of $30,000 on his schedule c. he had other taxable income of $5,000. he paid $3,000 for hospitalization insurance. his self-employment tax was $4,656. he paid his former wife $4,000 in court-ordered alimony and $4,000 in child support. what is the amount camilo can deduct in arriving at adjusted gross income (agi)?

Which of the following has the largest impact on opportunity cost