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Convertible preferred stock Valerian Corp. convertible preferred stock has a fixed conversion ratio of 5 common shares per 1 share of preferred stock. The preferred stock pays a dividend of $10.00 per share per year. The common stock currently sells for $20.00 per share and pays a dividend of $1.00 per share per year.
a) Judging on the basis of the conversion ratio and the price of the common shares, what is the current conversion value of each preferred share?
b) If the preferred shares are selling at $96.00 each, should an investor convert the preferred shares to common shares?
c)What factors might cause an investor not to convert from preferred to common stock?
Determining cost of equity as well as weighted average cost of capital and What would be the impact on its feasible project set
Gordon Company issued $1,000,000, ten year bonds and agreed to make annual sinking fund deposits of $80,000. The deposits are made at the end of each year into an account paying 5 percent yearly interest.
Lacey's has an average collection period of 32 days and factors all of its receivables immediately at a 1.1 percent discount. Assume all accounts are collected in full. What is the firm's effective cost of borrowing?
Examine and discuss the characteristics of NPV and the role that this method plays in capital investment decision making.
At each question the solution cell must contain the Excel formula (Function) that produced the answer. Replace the existing numerical contents. Also add a brief explanation of how the answer was derived and the significance of the question in unde..
If the company does not maintain a TIE ratio of at least 4 times, its bank will refuse to renew its loan, and bankruptcy will result. What is Alumbat's current TIE ratio?
Firm A is planning on merging with Firm B. Firm A will pay Firm B's stockholders the current value of their stock in shares of Firm A. Firm A currently has 2,300 shares of stock outstanding at a market price of $20 a share.
A ten-year bond, with par value equals $1000, pays 7% annually. If similar bonds are currently yielding 6%? annually, what is the market value of the bond using the semi annual analysis.
They expect their investment account to earn 9%. How large must the annual payments at t = 5, 6, and 7 be to cover Ellen's anticipated college costs?
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Also, Time Warner has $20 billion of debt that trades with a yield to maturity of 7%. If the firm's tax rate is 30%, compute the WACC?
Garner company $12 of vaiable and $5 of fixed costs to produce one bathroom scale which normally sells for $35. A foreign wholesaler offers to purchase 2,000 scales at $15 per.
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