What is the conversion ratio

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Reference no: EM131816141

1. Anson Jackson Court Company (AJC) The Anson Jackson Court Company (AJC) currently has $200,000 market value (and book value) of perpetual debt outstanding carrying a coupon rate of 6%. Its earnings before interest and taxes (EBIT) are $100,000, and it is a zero growth company. AJC's current cost of equity is 8.8%, and its tax rate is 40%. The firm has 10,000 shares of common stock outstanding selling at a price per share of $60.00. Refer to the data for the Anson Jackson Court Company (AJC). What is AJC's current total market value and weighted average cost of capital?

a. $600,000; 7.5% b. $600,000; 8.0% c. $800,000; 7.0% d. $800,000; 7.5% e. $800,000; 8.0%.

2. A $1,000 bond can be converted into common stock at a price of $48. The current market price of the bond is $988 and the current yield is 7.8%. What is the conversion ratio?

A) 7.80

B) 15.60

C) 20.58

D) 20.83

Reference no: EM131816141

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