What would be effect on the companys debt to equity ratio

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Reference no: EM13914515

Designs and manufactures advanced integrated digital technology platforms. The company has never earned a profit. In 2009, Intel issued $2,000,000,000 of junior subordinated convertible notes at 3.25 percent due in 2039 at face value. The notes are convertible into common stock at a price of $22.45 per share, which at the time of issue was above the market price. The market value of Intel's common stock ranged from $19.16 to $25.66 in 2011.12 What reasons can you suggest for Intel's management choosing notes that are convertible into common stock rather than simply issuing nonconvertible notes or issuing common stock directly? Are there any disadvantages to this approach? If the price of the company's common stock goes to $17 per share, what would be the total theoretical value of the notes? If the holders of the notes were to elect to convert the notes into common stock, what would be the effect on the company's debt to equity ratio, and what would be the effect on the percentage ownership of the company by other stockholders?

Reference no: EM13914515

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