Assume the firm's stock now sells for $20 per share. The company wants to sell some 20-year, $1,000 par value bonds with interest paid annually. Each bond will have attached 100 warrants, each exercisable into 1 share of stock at an exercise price of $25. The firm's straight bonds yield 9%. Assume that each warrant will have a market value of $3.75 when the stock sells at $20. What coupon interest rate and dollar coupon must the company set on the bonds with warrants if they are to clear the market? (Hint: The convertible bond should have an initial price of $1,000.) Do not round intermediate calculations. Round your answer for coupon interest rate to two decimal places. Round your answer for dollar coupon to the nearest dollar. Coupon interest rate: ____% Dollar coupon: $_____

Q: Banana Corporation has 4 million ordinary shares outstanding that are currently priced at $8.50 each…

A: Preference shares, often known as preferred stock, are stock shares that pay dividends to…

Q: The Smith Company has 10,000 bonds outstanding. The bonds are selling at 102% of face value, have a…

A: No. of bonds = 10,000 Selling price = 102% of par Par = $1,000 No. of pref shares = 500,000 Selling…

Q: Firm Z has issued 1,000,000 bonds. Each bond is priced at $929 and has a face value of $1000. It…

A: Firm Z has different sources of capital - debt, equity and preferred stock. We will have to find the…

Q: Given the following information for Watson Power Co., find the WACC. Assume the company’s tax rate…

A: The weighted average cost of capital (WACC) refers to the average cost that is paid by a company to…

Q: Warren Corporation's stock sells for $42 per share. The company wants to sell some 20-year, annual…

A: Coupon rate  =  interest / face value  Current price of bond = present value of interest + Present…

Q: Assume the firm’s stock now sells for $30 pershare. The company wants to raise $20million by issuing…

A: Since more than three parts are asked in a question. The solution for first three parts is only…

Q: Meacham Corp. wants to issue bonds with a 9% semi-annual coupon, a face value of $1,000, and 12…

A: The WACC is the overall cost of capital where the each sources cost is calculated and then consider…

Q: Eastern Clock Company has an outstanding issue of convertible bonds with a $1,000 par value. These…

A: As per the honor code, we only answer up to 3 sub-parts, we’ll answer the first 3. Please resubmit…

Q: The Smith Company has 10,000 bonds outstanding. The bonds are selling at 102% of face value, have a…

A: WACC takes all source of capital into account and assigns weights for computation. WACC increase…

Q: 1.On August 15, you purchased 100 shares of stock in the Top Company at $65 a share and a year later…

A: HPR or HPY = (Value of share at end - Value of share at beginning) / Value of share at beginning HPR…

Q: Foust has 25-year non-callable bonds outstanding with a face value of $1,000, an 12% annual coupon,…

A: The bond yield plus risk premium method is another instrument we can use to measure the value of an…

Q: The firm has bonds outstanding that mature in five years. The par value of each bond is $1,000, the…

A: Face value of bond is $1000 Coupon rate is 5% The bond pays annual coupons for 5 years until…

Q: Bukit, Inc issued a convertible bond that pays 5% semi-annual coupon (Face value is $1,000). If you…

A: Calculation of market price of bond is shown below: Hence, Price of bond is $1,000 Market value of…

Q: Sound Systems has 200 shares of common stock outstanding at a market price of $37 a share. The firm…

A: Weighted average cost of capital is the firms cost of capital after taking into account the…

Q: PQR has one share of stock and one bond. The total value of the two securities is $1.100. The bond…

A: Expected Return for stock = (Expected dividend / price of stock ) + growth rate

Q: A). The par value of 25-year 11% bond of SRT Ltd is $4,000. The bond has a remaining life of 7 years…

A: Bond is a debt instruments which is issued by corporations, financial institutions or government to…

Q: The Smith Company has 10,000 bonds outstanding. The bonds are selling at 102% of face value, have a…

A: The provided information are: Stock price = $64 Dividends = $1.10 Growth rate = 3% Risk free rate =…

Q: I got an answer of 6.2% for this question, Can you confirm or deny my answer? R.S. Green has 250,000…

A: The final answer is 6.16% that can be rounded off to 6.2%. Hence, your answer is correct.Let's…

Q: The Smith Company has 10,000 bonds outstanding. The bonds are selling at 102% of face value, have a…

A: Bonds:- Total No. of Bonds Outstansding is 10,000 Bond selling at 102% of face value Coupon rate is…

Q: Hewitt Packing (HP) Inc. has an issue of $1,000 par value bonds with a 14 percent coupon interest…

A: Bond valuation is a process of determining the fair value of a bond. valuation is done using the…

Q: CSNY Corporation has the 13,000 6.4 percent coupon bonds outstanding, with 15 years to maturity and…

A: The calculation of the kd as follows: The formula used for the calculation of the above table as…

Q: a) A bond with 8 years to maturity has a nominal value of NOK 1,000,000. Coupon rates at 3% per year…

A: a) Face value (F) = NOK 1000000 n = 8 years r = 4% Coupon (C) = 3% of F = NOK 30000

Q: Suppose Hillard Manufacturing sold an issue of bonds with a 12-year maturity, a $1,000 par value, a…

A: Bond value is the current worth of a bond on the basis of the present value of all the cash flows a…

Q: Consider the following information for Evenflow Power Co. Debt 5,500 bonds that each year pay 8.5…

A: WACC: Weighted average cost of capital is the calculation of all company's cost of the capital where…

Q: Calculate the current value of the preferred share if the average return of the shares in the same…

A: Those shares which are prioritized over common shares at the time of payment of dividends but did…

Q: Frozen Food Bhd has issued a bond with par value of RM1,000, a coupon rate of 9 percent that is paid…

A: We’ll answer the first question since the exact one wasn’t specified. Please submit a new question…

Q: CIT plc has an outstanding issue of £1,000-par-value bonds issued 5 years ago with a 12% coupon…

A: Bonds: It is a debt instrument issued by the firm to raise capital. The issuer pays coupon payments…

Q: Table Company, wants to sell some 20-year, annual interest, $1,000 par value bonds. Its stock sells…

A: Given the following information: Value of Bond = $1000 Number of Warrants = 80 The market price of…

Q: Firm Z has issued 1,000,000 bonds. Each bond is priced at $929 and has a face value of $1000. It…

A: WACC refers to the weighted average return that the firm pays for all the assets. NPV is the method…

Q: The Smith Company has 10,000 bonds outstanding. The bonds are selling at 102% of face value, have a…

A: Given information: Market price of common stock is $64 Dividend paid amount is $1.10 Dividend…

Q: Assume the firm's stock now sells for $20 per share. The company wants to sell some 20-year, $1,000…

A: Computation::-

Q: Calculate the current price of the ordinary share if the average return of the shares in the same…

A: Current Price of Share: It is the market price or market value of a share on which share is last…

Q: The Smith Company has 10,000 bonds outstanding. The bonds are selling at 102% of face value, have a…

A: Note: Since we only answer up to 3 sub-parts, we’ll answer the first 3. Please resubmit the question…

Q: The Smith Company has 10,000 bonds outstanding. The bonds are selling at 102% of face value, have a…

A: Market weights in the capital structure represents the net weight each capital source owns in the…

Q: b. Assume the firm’s stock now sells for $20 per share. The company wantsto sell some 20-year,…

A: Computation:

Q: The Smith Company has 10,000 bonds outstanding. The bonds are selling at 102% of face value, have a…

A: “Since you have posted a question with multiple sub-parts, we will solve the first three sub-parts…

Q: The Smith Company has 10,000 bonds outstanding. The bonds are selling at 102% of face value, have a…

A: The cost of equity is the minimum required rate of return by the shareholders for the capital…

Q: 8 The Flying Dove has 1,600 bonds outstanding with a $1,000 par value, a coupon rate of 5.5 percent,…

A: Weighted average cost of capital (WACC) in the company means total cost of equity and debt financing…

Q: Meacham Corp. wants to issue bonds with a 9% semi-annual coupon, a face value of $1,000, and 12…

A: “Since you have posted a question with multiple sub-parts, we will solve first three sub-parts for…

Q: The Smith Company has 10,000 bonds outstanding. The bonds are selling at 102% of face value, have a…

A: Given information: Stock price is $64 Dividend paid is $1.10 Growth rate is 3% Risk free rate is…

Q: The Lewin Inc. has the following financing outstanding. What is the WACC for the company? Debt…

A: given, risk free rate=3%market risk premium=6%beta = 1.2