User Account

All Pages

Calculate the exercise value of the firms warrants if the

Assignment Help Finance Basics
Reference no: EM13483576

Maese Industries Inc. has warrants outstanding that permit the holders to purchase 1 share of stock per warrant at a price of $25.

a. Calculate the exercise value of the firm"s warrants if the common sells at each of the following prices: (1) $20, (2) $25, (3) $30, (4) $100. (Hint: A warrant"s exercise value is the difference between the stock price and the purchase price specified by the warrant if the warrant were to be exercised.)

b. Assume the firm"s stock now sells for $20 per share. The company wants to sell some 20-year, $1,000 par value bonds with interest paid annually. Each bond will have attached 50 warrants, each exercisable into 1 share of stock at an exercise price of $25. The firm"s straight bonds yield 12%. Assume that each warrant will have a market value of $3 when the stock sells at $20. What coupon interest rate, and dollar coupon, must the company set on the bonds with warrants if they are to clear the market? (Hint: The convertible bond should have an initial price of $1,000.)

Reference no: EM13483576

Questions Cloud

Scorpion inc is trying to decide whether to increase the : scorpion inc. is trying to decide whether to increase the commission based pay of its salespeople. currently each of
What decision should mink make asell before assembly the : tram manufacturing is starting business and is unsure of whether to sell its product assembled or unassembled. the unit
At the beginning of the current period griffey corp had : at the beginning of the current period griffey corp. had balances in accounts receivable of 240500 and in allowance for
Ehrmann data systems is considering a project that has the : ehrmann data systems is considering a project that has the following cash flow and wacc data. what is the projects
Calculate the exercise value of the firms warrants if the : maese industries inc. has warrants outstanding that permit the holders to purchase 1 share of stock per warrant at a
Common fixed expenses 20000 10000 are mfg overhead : joe coffee cup manufacturing company has provided you the following information for the past three months. as a new
Aldridge enterprises has a long standing policy of : aldridge enterprises has a long standing policy of acquiring company equipment by leasing. early in 2011 the company
For this textbook edition the rate 06 was used for the futa : note for this textbook edition the rate 0.6 was used for the futa tax rate for employers. the following unemployment
Does the convertible issues lower coupon rate suggest that : suppose a company simultaneously issues 50 million of convertible bonds with a coupon rate of 10 and 50 million of

Reviews

Write a Review

Finance Basics Questions & Answers

  Financial reporting and analysis

Finance is about Gunns Ltd, a company in dealing with forestry products in Australia. The company has also been listed in Australian Stock Exchange. As many companies producing forestry products, even Gunns Ltd is facing various problems. Due to the ..

  A report on financial accounting

This report is specific for a core understanding for Financial Accounting and its relevant factors.

  Describe the types of financial ratios

Describe the types of financial ratios and other financial performance measures that are used during venture's successful life cycle.

  Differences between sole proprietorship and corporation

Briefly describe the major differences between a sole proprietorship and a corporation

  Prepare a cash budget statement

Calculate the expected value of the apartment in 20 years' time. What is the mortgage loan repayment at the beginning of each month

  What are the implied interest rates

What are the implied interest rates in Europe and the U.S.?

  State pricing theory and no-arbitrage pricing theory

State pricing theory and no-arbitrage pricing theory

  Small business administration

Identify the likely stage for each venture and describe the type of financing each venture is likely to be seeking and identify potential sources for that financing.

  Effect of financial leverage

The Effect of Financial Leverage and working capital management

  Evaluate the basis for the payment to the lender

Evaluate the basis for the payment to the lender and basis for the payment to the company-counterparty.

  Importance of opps, ipps, mpfs and dmepos

Research and discuss the differences and importance of : OPPS, IPPS, MPFS and DMEPOS.

  Time value of money

Time Value of Money project

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