User Account

All Pages

What condition is necessary for the warrants to be exercised

Assignment Help Financial Management
Reference no: EM13926678

The capital structure of Whitefield Mills, Inc., is as follows:

Long-term debt                                        $250 million

Common stock,                                        $1 par 25 million

Contributed capital in excess of par value    150 million

Retained earnings                                     350 million

Total capitalization                                    $775 million

The company has decided to raise additional capital by selling $75 million of 8 per- cent debentures with warrants attached. Each $1,000 debenture will have 25 war- rants attached, and each warrant will entitle the holder to purchase one share of common stock at $30.

a. Show the company's new capital structure after the sale of debentures and the exercise of all the warrants. Assume that no other changes in capital structure occur between now and the time the warrants are exercised.

b. What condition is necessary for the warrants to be exercised?

c. How much total money will the company raise as a result of this security issue, if all warrants are exercised?

Reference no: EM13926678

Questions Cloud

Describe two challenges of using mathematical symbols : Describe two challenges of using mathematical symbols in order to solve problems using formal logic and determine how you can overcome them
What role does justice play in the criminal court system : Explain what makes a person a criminal. Support your answer with an example from the textbook or your selected article. What role does justice play in the criminal court system? How do we achieve justice in criminal courts
Summarize the author essay and the author main argument : Summarize the author's essay and the author's main argument. What support does the author provide to defend his/her argument?
Describe why you think this discrepancy exists : Given the nature of the data sources, describe why you think this discrepancy exists. Be sure to note with reasons whether your overall results are or are not what you initially expected.
What condition is necessary for the warrants to be exercised : What condition is necessary for the warrants to be exercised? How much total money will the company raise as a result of this security issue, if all warrants are exercised?
What is the market clearing real interest rate : What is the market clearing real interest rate? Show your results on a real money supply, real money demand diagram and label this initial equilibrium point as point A. Be sure to label your graph completely!
Studying operations and supply chain management : Question 1. One reason for studying operations and supply chain management (OSCM) is which of the following?
How can you identify the dependent and independent variables : How can you identify the Dependent and independent variables in a real world situation modeled by a graph?
How many three-point questions did she get correct : Monica scored 32 points for her team at the science bowl. She got 5 four-point questions correct, and the rest of her points came from answering three-point questions. How many three-point questions did she get correct?

Reviews

Write a Review

Financial Management Questions & Answers

  What should be the price of portage bay stock

Portage Bay Enterprise has $2 million in excess cash, no debt, and is expected to have free cash flow of $12 million next year. Its FCF is then expected to grow at a rate of 3% per year forever. If Portage Bay's equity cost of capital is 10% and it h..

  Real interest rates are generally higher than nominal rate

On average, a coupon bond will increase in value as it approaches maturity. A bond with a coupon rate higher than its yield is worth more than its par value. Real interest rates are generally higher than nominal interest rates.

  How would single-rate allocation differ from dual-rate

Jug City, Inc. has two divisions within its one central plant: Forming Division and the Kilning Division. The following data apply to the coming budget year: If dual-rate allocation method is used, what amount will be allocated to the both divisions?..

  Treasury bill-what is the price and bond equivalent yield

A Treasury bill that settles on May 18, 2012, pays $100,000 on August 21, 2012. Assuming a discount rate of 3.87 percent, what is the price and bond equivalent yield? Use Excel to answer this question.

  Companies for building up cash and not paying dividends

Why did Microsoft decide in 2004 to double its cash dividend and buy back up to $30 billion of the company's stock over the next four years?

  What is the value per share of your firms stock

Assume that the average firm in your company’s industry is expected to grow at 6% and its dividend yield is 7%. Your company expects its dividends to grow 50% this year, 25% the following year, after which growth returns to the 6% industry average. I..

  What type of inventory does a farmer need

Why do firms or individuals involved in farming need to borrow? What type of inventory does a farmer need?

  Information for home mortgage

Assume the following information for a home mortgage: How much principal and interest was paid in year four, and what is the principal balance on the loan after four years?

  Current price under this new assumption of growth rate

A company currently pays a dividend of $2.0 per share. It is estimated that the company's dividend will grow at a rate of 20% per year for the next 4 years, and that the dividend will grow at a constant rate of 7% thereafter. What is your estimate of..

  Zero debt financing-capital structure have on firms profit

Seattle Health Plans currently use zero debt financing. Its operating profit is $ 1 million, and it pays taxes at a 40% rate. It has $5 million in assets and because it is all equity financed, $ 5 million in equity. What impact would the new capital ..

  What is the amount of the firms net working capital

Scare Train, Inc. has the following balance sheet statement items: current liabilities of $780,940; net fixed and other assets of $1,537,030; total assets of $3,424,010; and long term debt of $676,468. What is the amount of the firms’ net working cap..

  Income statement-find the pretax income

Little Books Inc. recently reported $6 million of net income. Its EBIT was $13.8 million, and its tax rate was 40%. What was its interest expense? Write out the headings for an income statement and then fill in the known values. Then divide $6 millio..

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

Submit Assignment

Academics

Major Subjects

Majors

Get In Touch

whatsapp: +1-415-670-9521

Phone: +1-415-670-9521

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd