View the step-by-step solution to: 1. At the current time Warren Industries can issue 15-year,

Hi Rachel, Please help me with the at...
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Hi Rachel,

Please help me with the attached question.

Thanks.
Question.doc

1.

At the current time Warren Industries can issue 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 the process (which implies that f = 2.97%, or
0.0297 in decimal form) and the firm is in a 40% tax bracket.
(a) Find the net proceeds from the sale of each bond for Warren Industries.
(b) Calculate the before-tax and the after-tax cost of debt for Warren
Industries.

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Dear Student Please find attached solution of your assignment. Regards View the full answer

Finance.doc

1. At the current time Warren Industries can issue 15year, $1,000 parvalue bonds paying
annual interest at a 12% coupon rate. As a result of current interest rates, the...

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