Already have an account? Get multiple benefits of using own account!
Login in your account..!
Remember me
Don't have an account? Create your account in less than a minutes,
Forgot password? how can I recover my password now!
Enter right registered email to receive password!
The Tsetsekos Company was planning to finance an expansion in the summer of 2004. The principal executives of the company all agreed that an industrial company such as theirs should finance growth by means of common stock rather than by debt. However, they felt that the price of the company's common stock did not reflect its true worth, so they decided to sell a convertible security. They considered a convertible debenture but feared the burden of fixed interest charges if the common stock did not rise in price to make conversion attractive. They decided on an issue of convertible preferred stock, which would pay a dividend of $2.10 per share. The common stock was selling for $42 a share at the time. Management projected earnings for 2004 at $3 a share and expected a future growth rate of 10 percent a year in 2005 and beyond. It was agreed by the investment bankers and the management that the common stock would sell at 14 times earnings, the current price/earnings ratio.
a. What conversion price should be set by the issuer? The conversion ratio will be 1.0; that is, each share of convertible preferred can be converted into 1 share of common. Therefore, the convertible's par value (and also the issue price) will be equal to the conversion price, which, in turn, will be determined as a percentage over the current market price of the common. Your answer will be a guess, but make it a reasonable one.
b. Should the preferred stock include a call provision? Why?
Assume the inventory ratio is based on a traditional inventory system, but globalized markets and the supply chain make it critical to adopt lean principles to create a more efficient system.
an entrepreneur has to decide between two possible investment projects. both projects cost 80.000 upfront. the short
Pacific Energy Company has a new project that will generate additional earnings of $112,000 each year in perpetuity. Calculate the new PE ratio of the company.
Calculation of stock price and required rate of return and What is the required rate of return
The 11.7 percent, $1,000 face value bonds of Tim McKnight, Inc., are currently selling at $915.12. What is the current yield?
Show the range in the NPVs for each variable and chart the analysis. Which variable has the highest risk and which variable has the lowest risk? Explain.
how should an insurance company identify potential exit markets for insurance contracts and for embedded derivatives in
Project A has an internal rate of return (IRR) of 15.3 percent and Project B has an IRR of 16.5 percent. Given this information, which one of the following statements is correct?
The firm feels that the project is riskier than the company as a whole and that it should use an adjustment factor of + 3 percent. What is the WACC it should use for the project?
What is PTFC weighted average cost of capital
xyz company has sales of 15450 costs of 4800 depreciation expense of 1900 and interest expense of 1250. if the tax rate
on your first through fifth birthdays your parents placed 2000 into your college fund five total deposits of 2000 each.
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!
whatsapp: +1-415-670-9521
Phone: +1-415-670-9521
Email: [email protected]
All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd