Problem:
Warren Industries can sell 15-year, $1,000-par-value bonds paying annual interest at a 12% coupon rate. As a result of current interest rates, the bonds can be sold for $1,010 each; flotation costs of $30 per bond will be incurred in this process. The firm is in the 40% tax bracket.
Required:
Question 1: Find the net proceeds from sale of the bond, Nd.
Question 2: Show the cash flows from the firm's point of view over the maturity of the bond.
Note: Explain all steps comprehensively.