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irina1246 [14]
3 years ago
13

Preissle Company, wants to sell some 20-year, annual interest, $1,000 par value bonds. Its stock sells for $42 per share, and ea

ch bond would have 75 warrants attached to it, each exercisable into one share of stock at an exercise price of $47. The firm's straight bonds yield 10%. Each warrant is expected to have a market value of $2.00 given that the stock sells for $42. What coupon interest rate must the company set on the bonds in order to sell the bonds-with-warrants at par?
Business
1 answer:
NikAS [45]3 years ago
6 0

Answer:

coupon interest rate that the company must set on the bonds in order to sell the bonds-with-warrants at par is 8.25%.

Explanation:

warrant per share = 2*75 = $150

price of the bond = 1000 - 150 - (1000/(1.05^40))

                             = $707.9543177

coupon*(1 -(1/(1.05^40)))/0.05 = 707.9543177

coupon*17.15908635 = 707.9543177

coupon = 41.25827583

coupon rate = 8.25%

Therefore, coupon interest rate that the company must set on the bonds in order to sell the bonds-with-warrants at par is 8.25%.

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Answer:

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Nursing home kitchens, corporate employee lunchrooms, and state park concession stands are all examples of? A. noncommercial foo
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D

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4 years ago
Ski West, Inc., operates a downhill ski area near Lake Tahoe, California. An all-day adult lift ticket can be purchased for $75.
Setler79 [48]

Answer:

a) It will accrue revenue through time. As in November 6th it has the obligation to keep the downhill ski open or return the cash

cash   405 debit

unearned reveue 405 credit

--to record sales of season pass--

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Two ways in which entrepreneurship can help to combat unemployment and improve the economy of south africa
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The process capability ratio/index = 0.83

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