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Business, 29.11.2019 00:31 Justus4215

Cost of debt using both methods (ytm and the approximation formula) currently, warren industries can sell 20 dash year, $1 comma 000-par-value bonds paying annual interest at a 11% coupon rate. because current market rates for similar bonds are just under 11%, warren can sell its bonds for $1 comma 080 each; warren will incur flotation costs of $30 per bond. the firm is in the 25% tax bracket. a. find the net proceeds from the sale of the bond, upper n subscript d. 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.

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