Cost of debt using both methods (YTM) Currently, Warren Industries can sell 10-year, $1,000-par-value bonds paying annual interest at a 13?% coupon rate. As a result of current interest rates, the bonds can be sold for $1,030 each before incurring flotation costs of $30 per bond. The firm is in the 40% tax bracket.
a. The net proceeds from the sale of the bond, Nd, is $. (Round to the nearest dollar.)
b. Using the bond's YTM, the before-tax cost of debt is %. (Round to two decimal places.)
Using the bond's YTM, the after-tax cost of debt is %. (Round to two decimal places.)