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The XLarge Corporation has a convertible bond outstanding with a conversion ratio of 20. The common stock is selling for $48.00. The convertible bond is selling for $1,160.00.
a) What is the conversion value? __________
b) What is the conversion premium? ________
c) What is the conversion price? ____________
d) If the common stock falls to $45, and the pure bond price is $890, will the bond sell for greater than its conversion value?
e) Why do firms offer convertible bonds? (discuss)
A company has net income of $1,500 and profit margin of 12%. The company’s depreciation expense for the year was $500, interest expense was $300, and the average tax rate is 35%. What was the company’s taxable income? What were the company’s total ex..
Harrison Corporation is interested in acquiring Van Buren Corporation. Assume that the risk-free rate of interest is 4%,
What is the percentage price change of the bond?
Find the bond's price today and twelve months from now after the next coupon is paid. What is the total rate of return on the bond?
value the project described using both APV and WACC: A project requires $65 million in investment today in order to go ahead.
A 19-year zero-coupon bond was issued with a $1000 par value to yield 15. What is the approximate market value of the bond?
How many futures contracts will you need to hedge a $240 million portfolio with a beta of 1.16 for one year?
Monthly deposits are made into a fund at the beginning of each month for 5 years. The first 12 deposits are $500 each, and deposits increase by 5% every year. Find the accumulated value at the end of 5 years if i(12) = 0.06.
MarV, Inc. is considering adding a new wing to their Assisted Living Facility.
The initial investment in the project is USD 1,100. The spot rate for the foreign currency is USD 1.60. What is the NPV of blocked funds?
Advance, Inc is trying to determine its cost of debt. The firm has a debt issue outstanding with 10 years to maturity that is quoted at 108 percent of face value. The issue makes semiannual payments and has a coupon rate of 9 percent annually. What i..
Find the project's standard deviation of NPV and coefficient of variation (CV) of NPV.
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