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pishuonlain [190]
2 years ago
10

Potter & Lopez Inc. just sold a bond with 50 warrants attached. The bonds have a 20-year maturity and an annual coupon of 12

%, and they were issued at their $1,000 par value. The current yield on similar straight bonds is 15%. What is the implied value of each warrant?
Business
1 answer:
AfilCa [17]2 years ago
4 0

Answer:

$3.76

Explanation:

Calculation of the implied value of each warrant

First step is to find the straight-debt value

Straight-debt value:

N = 20

I/YR = 15

PMT = −120

FV = −1000

PV = $812.22

Using this formula

Total value = Straight-debt value + Warrant value

Where,

Total value =$1,000

Straight-debt value=$812.22

Warrant=50

Let plug in the formula

$1,000 = $812.22 + 50

Second step is to find the warrant value

Warrant value= ($1,000 −$812.22)/50

=$187.78/50

=$3.7556

Approximately $3.76

Therefore the implied value of each warrant will be $3.76

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Gymtastic was able to serve large crowds of customers and then adjust operations to serve very few customers thanks to their com
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The competitive capability which relates to flexibility is the reason that Gymtastic was able to serve large crowds of customers and then adjust operations to serve very few customers.

<h3>What is the competitive capability?</h3>

Competitive capability relates to the unique ability possess by a company over other competitors.

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4 0
2 years ago
Indirect costs incurred in a manufacturing environment that cannot be traced directly to a product are treated as a.period costs
Dima020 [189]

Answer:

Indirect costs incurred in a manufacturing environment that cannot be traced directly to a product are treated as Product costs and expenses when the goods are sold, Option D.

Explanation:

Indirect costs are also manufacturing overheads which cannot be directly put on the product but they have to be allocated in some way. So, these are treated as 'product costs' and 'expenses' when the goods are sold. They are not period costs as per Option A and option C. Option B which says that it is product costs when incurred, which is also incorrect.

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8 0
3 years ago
Suppose a tire manufacturer wants to set a mileage guarantee on its new XB 70 tire. Tests revealed that the tire's mileage is no
kogti [31]

Answer:

The manufacturer should announce a guaranteed mileage of 44528 miles

Explanation:

Problems of normally distributed samples are solved using the z-score formula.

In a set with mean \mu and standard deviation \sigma, the zscore of a measure X is given by:

Z = \frac{X - \mu}{\sigma}

The Z-score measures how many standard deviations the measure is from the mean. After finding the Z-score, we look at the z-score table and find the p-value associated with this z-score. This p-value is the probability that the value of the measure is smaller than X, that is, the percentile of X. Subtracting 1 by the pvalue, we get the probability that the value of the measure is greater than X.

In this problem, we have that:

\mu = 47900, \sigma = 2050

What guaranteed mileage should the manufacturer announce

Only until the 5th percentile will have to be replaced, which is the value of X when Z has a pvalue of 0.05. So it is X when Z = -1.645.

Z = \frac{X - \mu}{\sigma}

-1.645 = \frac{X - 47900}{2050}

X - 47900 = -1.645*2050

X = 44528

The manufacturer should announce a guaranteed mileage of 44528 miles

6 0
3 years ago
Read 2 more answers
Is the cost of equity calculated from the CAPM model, pre -tax or post-tax?
Natasha_Volkova [10]
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3 0
3 years ago
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