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What is the value of kbc warrant

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a) The current firm value of BBC is $26.9 million. The firm value will be either $37.9 million or $15.2 million one year later. BBC has outstanding zero coupon bonds due in one year with a face value of $21.1 million. The one year risk free interest rate is 4.0. What is the yield on BBC bond?

b) KBC has 413,168 shares outstanding. If all of its outstanding 2-month warrants, which have exercise price of $45.4 were exercised, the total number of shares outstanding would be 516,586. KBC stock is trading at $48.8 and will either increase 7.3% or decrease 20.4% in 2 months. If the risk-free interest rate is 2.0% per month, what is the value of KBC warrant?

c) NBC has 13,659 shares of common stock outstanding at a market price of $28.4 a share. It pays an annual dividend of $4.8 per share forever. It also has 189 bonds outstanding with a face value of $1,000 per bond. The bonds carry a 14% coupon, pay interest semiannually, and mature in 16 years. The bonds are trading to yield at 9%. The company's tax rate is 28%. What is NBC's weighted average cost of capital?

Reference no: EM133004806

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