Convertible debenture valuation

Assignment Help Financial Management
Reference no: EM131450525

Convertible Debenture Valuation

Recently, Orillia Real Estate Development Corp. issued 6% Convertible Debentures with a face value of $1,000. The coupons are payable semi-annually and the debenture matures in 10 years. The conversion price of the debentures is $20 per share, giving a conversion rate of 50 shares per debenture ($1,000 / $20). Debentures without a conversion feature, but with the same level of risk are currently providing a yield to maturity of 8% compounded semi-annually. The shares are currently trading at $18. What is the minimum price at which the Orillia Real Estate Development Corp. convertible debentures should sell?

Reference no: EM131450525

Questions Cloud

To what degree have you chosen your own values : Consider your own personal values and explain where they originated. Can you pinpoint their derivation.
What is the company total asset turnover : The Cavo Company has an ROA of 9.3 percent, a profit margin of 11 percent, and an ROE of 17 percent. What is the company’s total asset turnover?
What information is available at state or city government : Determine what information is available at state or city government's public health department regarding the reporting of communicable diseases.
Create a research question related to your problem statement : Discuss components of each study (that is, what was done in the study). Determine validity of each study
Convertible debenture valuation : What is the minimum price at which the Orillia Real Estate Development Corp. convertible debentures should sell?
Explain difference between religions and ethnicities : How can your global firm best ensure that it is taking into account the perceptual differences that may exist as a result of diverse cultures.
Conventional mortgage from the americana bank : You are applying for a conventional mortgage from the Americana Bank.What is the highest PITI for which you can qualify?
Describe each given technology or application in detail : Describe each technology or application in detail and explain how it is either unique (differentiation) or tailored to a specific group of customers.
Develop a problem statement related to health care : Identify a research area that interests you. Develop a problem statement related to health care based on the problem identified.

Reviews

Write a Review

Financial Management Questions & Answers

  Long-term corporate bonds

You invested in long-term corporate bonds and earned 6.1 percent. During that same time period, large-company stocks returned 12.6 percent, long-term government bonds returned 5.7 percent, U.S. Treasury bills returned 4.2 percent, and inflation avera..

  Debt utilization and du pont system of analysis

Debt utilization and Du Pont system of analysis. Using the income statement for Times Mirror and Glass Co., compute the following ratios: TIMES MIRROR AND GLASS Co. Income Statement Sales $ 244,000 Cost of goods sold 135,000 Gross profit $ 109,000. C..

  Annual deposits into the savings account starting today

A retirement home in Florida costs $200,000 today. Housing prices in Florida are increasing at a rate of 4% per year. Joe wants to buy the home in 8 years when he retires. Joe has $25,000 right now in a savings account paying 8% interest per year. Jo..

  How much would you willing to pay for one of the bonds today

It is now January 2005, and interest rates have declined such that bonds of equivalent remaining maturity now sell to yield 11 percent. How much would you be willing to pay for one of these bonds today? Why?

  Which strategy has highest expected value for equity holders

Consider a start-up firm that has three different potential business models whose after-tax payoffs are summarized below along with their respective probabilities: With $0 in debt, which strategy has the highest expected value for equity holders?

  Statement of cash flows-increase in property-plant

Under the indirect method of determining the net cash provided by operating activities on the statement of cash flows, an increase in property, plant, and equipment is subtracted from net income.

  Compact fluorescent lamps-make financial sense

Compact fluorescent lamps (CFLs) have become required in recent years, but do they make financial sense? Suppose a typical 60-watt incandescent light bulb costs $.47 and lasts 1,000 hours. A 15-watt CFL, which provides the same light, costs $3.50 and..

  What profit margin must the firm achieve

Fulkerson Manufacturing wishes to maintain a sustainable growth rate of 8.75 percent a year, a debt-equity ratio of .52, and a dividend payout ratio of 26.5 percent.- What profit margin must the firm achieve?

  Social value model for making capital budgeting decisions

Describe the net present social value model for making capital budgeting decisions. Giving at least one specific example, explain how social value might be measured. What role does the NPV model play in not-for-profit management? Explain your reasoni..

  Can investors accurately forecast the direction of future

Provide one reason for using the bank's investment portfolio to speculate on interest rate movements. Provide one reason against such a strategy. What do you believe about efficient markets, and how does this influence your opinion of speculating? Ca..

  Bonds have the same amount of risk

Three $1000 face value, 10-year, non-callable, bonds have the same amount of risk, hence their YTMs are equal. Bond 7 has a 7% annual coupon, bond 10 has a 10% annual coupon, and bond 11 has an 11% annual coupon.

  Current ratio times what is the quick ratio

SDJ, Inc., has net working capital of $3,710, current liabilities of $5,500, and inventory of $4,440. What is the current ratio? (Do not round intermediate calculations. Round your answer to 2 decimal places, e.g., 32.16.) Current ratio times What is..

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