Calculate the after-tax cost of bonds with warrants (t = 30

Reference no: EM13154040

1. A 20-year bond comes with 25 warrants attached. Each warrant has a strike price (also called an exercise price) of $15 and 10 years until expiration. Each warrant's value is estimated to be $8. The cost of debt for a 20-year annual payment bond without warrants is 8%. When exercised, each warrant will bring in an amount equal to the strike price, which is $20. The firm will receive cash when the warrants are exercised. What coupon rate must be set on the bond with warrants to make the total package sell for $1,000? How many shares of stock will be outstanding after the warrants are exercised (there are 30 million shares at Year 0). Estimate the Cost of Capital for the Bond with Warrants, rBwW. Also calculate the after-tax Cost of Bonds with Warrants (T = 30%).

Reference no: EM13154040

Questions Cloud

Classify the substances according to the strongest solute : Classify the substances according to the strongest solute-solvent interaction that will occur between the given substances and water during dissolution

Determine the amount of heat energy needed : determine the amount of heat energy needed to convert 255g of substance x from 40 degrees to 300 degrees

Journal entry to record the flow of costs : The journal entry to record the flow of costs into Department 2 during the period for direct materials is:

Subject to the production quota : Constrained Optimization in Economics 2. Minimize costs for a firm with a cost function Subject to the production quota

Calculate the after-tax cost of bonds with warrants (t = 30 : 1. A 20-year bond comes with 25 warrants attached. Each warrant has a strike price (also called an exercise price) of $15 and 10 years until expiration. Each warrant's value is estimated to be $8. The cost of debt for a 20-year annual payment bond wi..

Determine if life expectancy of people in africa is less : What is the test value? A sociologist wants to determine if the life expectancy of people in Africa is less than the life expectancy of people in Asia. Calculate the critical value. Use a=0.05.

Determined de depletion rate : Solare company acquired mineral rights for 60,000,000. The diamond deposit is estimated at 6,000,000 tons. During the current year , 2,300,000 were mined and sold.. A-determined de depletion rate.

Explain mass percentage and in parts per million : Express the concentration of a 0.0720 M aqueous solution of fluoride, F-, in mass percentage and in parts per million

N the income statement grow proportionally with sales? : If smith pays out 25% of their projected net income as dividends, what will be the company's addition to retained earnings. If sales grow by 25% and all items on the income statement grow proportionally with sales?

User Account

All Pages