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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:

Date               Account Title                                              Debit               Credit

May 7             Materials                                                 $9,600

                      Accounts Payable                                                            $9,600

<u>Working:</u>

= Units purchased * cost per unit

= 640 * 15

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3 years ago
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goldenfox [79]

Answer:

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6 0
4 years ago
Rick is a new product manager for a large biochemical firm. He is currently working on a proposal for a new chemical solvent and
serg [7]

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7 0
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A burger and fries cost $2.20. the burger costs $2.00 more than the fries. how much do the fries cost?
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To solve this question, we need to do a substitution formula on both equations

Burger + Fries =  $ 2.20

Burger - Fries = $ 2.00


________________________ - 

             2 Fries   = $ 0.20

                Fries    = $ 0.1
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Answer:

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