Answered You can hire a professional tutor to get the answer.
Urrently, 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; flotatio
Urrently, 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.
a. find the net proceeds from sale of the bond, nd.
b. showthecashflowsfromthefirm'spointofviewoverthematurityofthebond.
c. calculate the before-tax and after-tax costs of debt.
d. usetheapproximationformulatoestimatethebefore-taxandafter-taxcostsof debt.
e. compare and contrast the costs of debt calculated in parts c and
d. which approach do you prefer? why?
