Question 4: Chapter 1On 1 October 20X3, Shanghai issued $10 million convertible loan notes which carry a coupon rate of 5% per annum. The loan notes are redeemable on 30 September 20X6 at par for cash or can be exchanged for equity shares. A similar loan note, without the conversion option, would have required Shanghai to pay an interest rate of 8%. (1) What is the amount that will be recognized as finance costs for the year ended 30 September 20X4. (2) What is the amount that should be shown under liabilities at 30 Sep 20X4.(3) How much would be recorded in equity in relation to the loan notes?Show your workings and round your answers to 2 decimals. Question 4:On 1 October 20X3, Shanghai issued $10 million convertible loan notes which carry a coupon rate of 5%per annum. The loan notes are redeemable on 30 September 20X6 at par for cash or can be exchangedfor equity shares. A similar loan note, without the conversion option, would have required Shanghai topay an interest rate of 8%.5%8%End of year0.950.930.910.860.860.79cumulative2.722.58(1) What is the amount that will be recognized as finance costs for the year ended 30 September 20X4.(2) What is the amount that should be shown under liabilities at 30 Sep 20X4.(3) How much would be recorded in equity in relation to the loan notes?Show your workings and round your answers to 2 decimals.

Equity component=Amount raised-FV of loan

Question 4: Chapter 1 On 1 October 20X3, Shanghai issued $10 million convertible loan notes which carry a coupon rate of 5% per annum. The loan notes are redeemable on 30 September 20X6 at par for cash or can be exchanged for equity shares. A similar loan note, without the conversion option, would have required Shanghai to pay an interest rate of 8%. (1) What is the amount that will be recognized as finance costs for the year ended 30 September 20X4. (2) What is the amount that should be shown under liabilities at 30 Sep 20X4. (3) How much would be recorded in equity in relation to the loan notes? Show your workings and round your answers to 2 decimals.

Question 4: Chapter 1 On 1 October 20X3, Shanghai issued $10 million convertible loan notes which carry a coupon rate of 5% per annum. The loan notes are redeemable on 30 September 20X6 at par for cash or can be exchanged for equity shares. A similar loan note, without the conversion option, would have required Shanghai to pay an interest rate of 8%. (1) What is the amount that will be recognized as finance costs for the year ended 30 September 20X4. (2) What is the amount that should be shown under liabilities at 30 Sep 20X4. (3) How much would be recorded in equity in relation to the loan notes? Show your workings and round your answers to 2 decimals.

EBK CFIN

6th Edition

ISBN:9781337671743

Author:BESLEY

Publisher:BESLEY

Chapter11: The Cost Of Capital

Section: Chapter Questions

Problem 1PROB

See similar textbooks

Similar questions

Bertrand issued $10 million convertible loan notes on 1 October 20X0 that carry a nominal interest (coupon)rate of 5% per annum. They are redeemable on 30 September 20X3 at par for cash or can be exchanged forequity shares in Bertrand on the basis of 20 shares for each $100 of loan. A similar loan note, without theconversion option, would have required Bertrand to pay an interest rate of 8%.What is the amount that willbe recognised as
A firm issues 4% convertible loan notes that are redeemable in 4 years’ time at a per-note nominal value of £100. Each loan note could alternatively be converted into 15 ordinary shares in 4 years’ time. The cost of debt is 6%. The current share price is £6.20 per share, and future share price growth is expected to be 4% per year. What is the current market value of a convertible loan note to two decimal places?
Question three Cadbury Limited has a public traded debt (debentures) with a face value of R3 million. The coupon rate of the debenture is 8% and the current market interest rate is 11%. The debenture has 7 years to maturity. Calculate the present value of the debenture after 7 yearsNote that: the coupon rate will give a yearly interest amount of = 8% X R3million= R240 000The current market interest (i) is used to calculate the present factor and formula is present factor= 1/(1+i)n round off the answer four decimal places
1. A CD with a coupon of 3% in USD 5,000,000 which was originally issued for 182 days is now purchased at a rate of 3 % with only 7 days to maturity. What is the consideration payable? Base Days: 3602. An exporter discounts a 90 days invoice worth of PKR 2.5mn after 15 days. What is the mark up amount if mark up rate is 12% flat? 360 Days Basis3. What is the effective annual rate of a corporate bond yielding 3% on quarterly basis? Compare it with a behbud fund (tax free) with annual return of 3% if the tax rate is 3%? 4. A 3 months GoP TBill issued at a discount rate of 9.5%. Calculate its equivalent yield? (360 days basis)
Q6. A financial institution has borrowed a one-year $20 million Eurodollar deposit at an annual interest rate of 1.5 percent. It has invested these proceeds in one-year Euro (€) bonds at an annual rate of 2.5 percent after converting them at the current spot rate of €1.22/$. Both interest and principal are paid at the end of the year. What is the spread earned by the bank at the end of the year if the exchange rate remains at €1.22/$? a) 1.50 percent b) 2.50 percent c) 0.50 percent d) 1 percent e) 2.00 percent
QUESTION 1 A Suppose you deposited the K 1000 in four payments of K250 each on 1st January of 2009, 2010, 2011 and 2012. How much would you have in your account on 1st January 2012 based on 8 percent annual compounding? B A government bond issued 5 years to maturity, a face value of K 1,000 and a coupon rate of 8% paid annually. Similar bonds have a yield of 8 percent. Suppose after one year the yield rises to 9% and interest is paid semi-annually, what would be the value of the bond Assume it is now 1st January 2008. On 1st January 2009, you will deposit K 1000 into a savings account that pays 8 percent If the bank compounds interest annually. How much will you have in your account on 1st January 2012 What would your 1st January 2012 balance be if the bank used quarterly compounding rather than annual compounding?
A firm issues 2-year bonds with a coupon rate of 4.9%, paid semiannually. The credit spread for this firm's 2-year debt is 1.2%. New 2-year Treasury notes are being issued at par with a coupon rate of 5.2%. What should the price of the firm's outstanding 2-year bonds be if their face value is $1000? A. $4.80 B. $972.25 C. $777.80 D.
A firm issues two-year bonds with a coupon rate of 6.9%, paid semiannually. The credit spread for this firm's two-year debt is 0.8%. New two-year Treasury notes are being issued at par with a coupon rate of 3.2%. What should the price of the firm's outstanding two-year bonds be per $100 of face value? OA. $84.42 OB. $105.52 OC. $126.63 OD. $147.73 Res Printed Date:
Suppose a bank enters a repurchase agreerment in which it agrees to sell Treasury securities to a correspondent bank at a price of $9.99,838 with the promise to buy them back at a price of $10.000,073. Calculate the yield on the repo if it has a 6-day maturity. (write your answer in percentage and round it to 2 decimal places)
Eastern Bank Limited (EBL) has issued a12% Semi-annual Corporate Bond of Tk. 1000 for 8 years. The YTM is 10%. Required: i. Market Price of Bond. ii. One year from now, investors has realized the bond when YTM has decreased to 8% and the reinvestment rate is 10%. What would be the realized compound yield?
Roundall dollar answers to 2 decimal places and record all interest rate, coupon rate and growth rate answers as a percentrounded to one decimal place 34. Pennypacker Industries needs to raise $40,000,000 by issuing bonds. The company plans to issue a $1000 parvalue, 16-year semi-annual payment bond that has a coupon rate of 4.40%. The yield to maturity on the bondis expected to be 4.70%. How many bonds must Pennypacker Industries issue? Round your answer up to thenearest whole number (i.e., no decimal places); for example, enter 112,304.874 or 112,304.128 as 112305.35. Compute the price of a $5000 par value bond with a coupon rate of 7.15% (semi-annual payments) and 29years remaining to maturity. Assume that the current yield to maturity on the bond is 8.60%
An investor invested in a 4-years, 4 percent EuroLBP bond sells at par. A comparable risk 4 years, 5.5 percent LBP/dollar dual currency bond pays $666.66 at maturity per LBP1,000,000 of face value. It sells for 1,200,000. Required: Calculate the implied LBP/$ exchange rate at maturity.