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A 10-year maturity convertible bond with a face value of $1,000 and a 6% coupon on a company with a bond rating of Aaa is selling for $1,050. The bond pays interest annually. Each bond can be exchanged for 20 shares, and the stock price currently is $50 per share. Other Aaa-rated bonds with the same maturity would sell at a yield to maturity of 8%. What is the value of the bondholders' call option? (Do not round intermediate calculations. Round your answer to 2 decimal places.)
A bakery invests $34,000 in a light delivery truck. This was depreciated using the 5 years MACRS schedule shown above. If the company sold it immediately after the end of year 2 for $21,000. What would be the after-tax cash flow from sale of this ass..
Your company has a debt to equity ratio equal to 2.5 and a constant debt policy. The company's debt is risky with a beta equal to 0.1, and the market cost of debt is 3%. The corporate tax rate is 15%, the risk free rate is 1% and the return on levere..
Year Account balance, beginning of year" "Deposit at beginning of year" "Interest earned during year" "Total in account, end year"
A bond with face and redemption amount of $3000 with annual coupons is selling at an effective annual yield rate equal to twice the coupon rate. The present value of the coupons is equal to the present value of the redemption amount. What is the sell..
Assessing the Use of Financial Data in Strategic Decision-Making - Post an explanation of the tools that you believe would help you to reach a decision - Post an explanation of the tools that you believe would help you to reach a decision.
The expected rate of return on the shares is 12%. Calculate the opportunity cost of capital for an average-risk Whispering Pines investment. Next, suppose the company issue debt, repurchases shares, and moves to a 30% debt to value ratio (D/V=.30). C..
Suppose that the installation of low-loss thermal windows is expected to save 450 per year on bills. If you live in your home for 40 years and could earn 6% per year on other investments, how much could you afford to pay now to have the windows insta..
Company has an opportunity to make an investment with the estimated after tax cash flows
First, to focus more on the relationship between debt and the cost of capital, can you or anyone else provide an example in which changes in leverage would not affect the cost of capital, and subsequently the viability of future projects and investme..
Given returns of 15%, -8%, 12%, and 5%, the difference between the arithmetic average and geometric average is. A four year project costs $125,000 and returns $42,025 at the end of each of the next four years. The internal rate of return (IRR) for th..
Knight Inventory Systems, Inc., has announced a rights offer. The company has announced that it will take three rights to buy a new share in the offering at a subscription price of $50. At the close of business the day before the ex-rights day, the c..
DuPont analysis for Google and Yahoo companies for each of the last five fiscal years; use the Financial Statements filed with the SEC. This submission must be an Excel spreadsheet containing the calculated values.
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