What rate of return did investor receive

Assignment Help Accounting Basics

Reference no: EM131881578

Problem

In January 2003, an investor bought a convertible debenture bond Issued by the XLA Corporation. The bond cost $1000 and paid $60 per year interest in annual payments on December 31. Under the convertible feature of the bond, it could be converted into 20 shares of common stock by tendering the bond, together with $400 cash. The next business day after the investor received the December 31, 2005, interest payment, he submitted the bond together with $400 to the XLA Corporation. In return, he received the 20 shares of common stock. The common stock paid no dividends. On December 31, 2007, the investor sold the stock for $1740, terminating his 5-year investment in XLA Corporation. What rate of return did he receive?

Reference no: EM131881578

Questions Cloud

What is the inside and outside basis of both partners : What amount is considered a gain or loss for Brandon and Landon's interest in the partnership? What is the inside and outside basis of both partners?

What is your opinion of ingborg two proposals : 1. What is your opinion of Ingborg's two proposals? Which, if either, would you accept, and why?

What is the after-tax cost of debt : Calculate the after tax cost of debt using the following information (hint: see page 285 in text). A company issues $2 million at 9% interest with a 15% tax.

What is the monthly mortgage payment : What is the monthly mortgage payment for a 30-yr fixed rate mortgage with an interest rate of 4.75%, 1.5 points, and $1000 in fees on a home.

What rate of return did investor receive : On December 31, 2007, the investor sold the stock for $1740, terminating his 5-year investment in XLA Corporation. What rate of return did he receive?

Height of pothole season : During March, the height of pothole season, Fred's is open from 7 a.m. to 9 p.m. on weekdays and 7 a.m. to 5 p.m.on Saturday.

What are the methods of amortizing discount on bonds payable : Differentiate between a fixed-rate mortgage and a variable-rate mortgage. What are the two methods of amortizing discount and premium on bonds payable?

Compute the net cash flow in 2015 : Compute the net cash flow in 2015, and explain the meaning of the final number you found from the computation.

Person paying for a meal : The counter length includes both the person paying for a meal and those waiting in line) Enter your answer as a decimal (not a percentage

User Account

All Pages