Calculate the conversion for stock value of the bond

Assignment Help Financial Accounting
Reference no: EM133089768

Question - Determining values-Convertible bond - Craig's Cake Company has an outstanding issue of 16-year convertible bonds with a $20M par value. These bonds are convertible into 65 shares of common stock. They have a 15% annual coupon interest rate, whereas the interest rate on straight bonds of similar risk is 16%.

Required -

a. Calculate the straight bond value of this bond.

b. Calculate the conversion for stock value of the bond when the market price is $20 per share of common stock.

c. What is the minimum market value of the bond?

Reference no: EM133089768

Questions Cloud

Event report and events management : Conduct research on an event of your choice, either online or by attending local event. Things that were well planned and things that were not well organized.
Develop a profiling report : Identify the segmentation criteria referred to in the marketing plan and consider if there are other segmentation criteria that could be used to define
Basic quality tools : How do the basic quality tools (cause and effect diagrams, histograms, flowcharts, etc) relate to problem-solving processes?
Case study-revlon inc : Headquartered in New York City, Revlon is a large beauty and personal care products company and is a subsidiary of MacAndrews & Forbes Holding Inc. Popular Revl
Calculate the conversion for stock value of the bond : They have a 15% annual coupon interest rate, whereas the interest rate on straight bonds of similar risk is 16%. Calculate the conversion for stock value
Business idea as a young entrepreneur : How will you raise financing for your small business idea as a young entrepreneur?
Evaluate the effectiveness of body treatments : 1. Evaluate the use and limitations of products used for body electrical treatments.
Develop a marketing positioning strategy : Develop a profiling report in relation to organisational structure, role, responsibilities and plan in the template provided using information in the Marketing
What is the depletion expense in the third year : An Iron ore mine in Brazil cost $4M and contains an estimated amount of 1,600,000 tons of Iron ore. What is the depletion expense in the third year

Reviews

Write a Review

Financial Accounting Questions & Answers

  Find and calculate the company interest charges

Find and Calculate the company's interest charges. The company has earnings after interest but before taxes of $256. The company's times interest

  How sensitive operating cash flow is to sales

The CEO is concerned with the Sales departments projections and would like to know how sensitive Operating Cash Flow is to sales.

  Prepare diana healthy journal entries

Prepare Diana Healthy journal entries relating to the above donation by Aron Enterprises - describe how Diana Healthy should record it under the restricted fund

  Which of statements is correct with respect to the options

The exercise price is $4.00 and Solar's share price at the time of the grant was $3.00. Which of statements is correct with respect to the options

  What amount would be included on the nunavut payroll tax

If Gioia normally works in British Columbia and earned $60,000.00, What amount would be included on the Nunavut Payroll Tax Annual Return?

  By how much did net income increase due to the liquidation

The disclosure note indicates an inventory liquidation during 2021, 2020, and 2019. By how much did net income in 2021 increase due to the liquidation

  What do think about approach for abc company

Company has found in the past 10 years that small illegal or unethical acts lead to larger illegal or unethical behavior. What do you think about this approach?

  Analyze accounting situation to apply proper accounting rule

Analyze accounting situations to apply the proper accounting rules and make recommendations to ensure compliance with generally accepted accounting principles.

  Describe the concerns regarding basel from the perspective

The Basel Committee on Banking Supervision (BCBS) has agreed. Describe the concerns regarding Basel III from the perspective of the German banking system.

  Prepare all necessary equity-related journal entries

On February 1, 2020, Birdwell resold 40,000 shares of treasury stock for $20 per share. Prepare all necessary equity-related journal entries for the year

  What is the unit cost per visit after the change

What is the unit cost per visit? How does the post-change productivity compare with the pre-change productivity, on a unit cost ($ per patient visit) basis?

  Why must individual funds be displayed in a government

Why must individual funds be displayed in a government's annual report. How are the same requirements relevant or not in not-for-profit

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!

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