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JulijaS [17]
2 years ago
8

Harrison owns a convertible bond with an 6% annual coupon and a $1,000 face value. It matures in 15 years and can be exchanged f

or 40 shares of Ford stock, which is trading at $24 per share. Similar nonconvertible bonds are priced to yield 6.5%. The value of the convertible bond is at least __________?
Business
1 answer:
raketka [301]2 years ago
3 0

Answer:

$953

Explanation:

According IFRS the equity and Liability portion of a bond should be recorded separately at the time of bond Issuance. The Liability portion can be calculated current value of the similar non convertible bonds and the difference between the Present value of cash flows and total proceeds from bond is the equity value.

Convertible Bond are value at the present value of their cash flows.

Use following formula to calculate the value of the bond.

Value of the Bond = C x [ ( 1 - ( 1 + r )^-n ) / r ] + [ F / ( 1 + r )^n ]

Value of the Bond = ($1,000 x 6%) x [ ( 1 - ( 1 + 6.5% )^-15 ) / 6.5% ] + [ $1,000 / ( 1 + 6.5% )^15 ]

Value of the Bond = $952.99

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Analysis of the general environment enables a firm to identify: a. capabilities b. opportunities and threats c. strategic resour
attashe74 [19]

Option B

Analysis of the general environment enables a firm to identify: opportunities and threats

<u>Explanation:</u>

The general environment usually has a sturdy impact on a firm's level of achievement, officials must pursue biases and circumstances as they emerge and attempt to envision the associations of these biases and circumstances.

The environmental inquiry is an imperative tool. It is a manner to distinguish all the outside and subjective factors, which can influence the organization’s execution. The review involves valuing the level of threat, an opportunity the determinants might impersonate. These determinants are succeeding rendered into further means.

6 0
3 years ago
Kenny, Inc., is looking at setting up a new manufacturing plant in South Park. The company bought some land six years ago for $7
professor190 [17]

Answer:

$33,540,000

Explanation:

initial investment:

  • opportunity cost of land (resale price of land) = $10,700,000
  • building cost of the facilities = $21,900,000
  • other expenses related to the site (grading) = $940,000
  • total $33,540,000

The purchase cost of the land is considered a sunk costs, since it is not relevant now. What is relevant is the price at which the land could be sold at the moment of starting the project.

7 0
3 years ago
What should be the price of a common stock paying $3.50 annually in dividends if the growth rate is zero and the discount rate i
katrin [286]

Answer:

$43.75

Explanation:

Dividend discount model with zero growth assumes that the Company shall continue to pay the same amount of dividend in infinity. The formula for calculating price of such stock is

Price = Annual Dividend / Discount rate

Price = $3.5 / 8%

Price = $43.75 / per share

3 0
2 years ago
How does investing in the stock market differ from putting money in a savings account at a bank​?
n200080 [17]

Answer:

d. you have the opportunity to make more money when you invest compared to what you can earn putting your money in a savings account

5 0
3 years ago
Treasury stock that had been purchased for $4,330 last month was reissued this month for $5,190. The journal entry to record the
Anon25 [30]

Answer:

Credit to Paid-In Capital from Treasury Stock for $860

Explanation:

Based on the information given we were told that Treasury stock was purchased for the amount of $4,330 last month in which it was reissued this month for the amount of $5,190 which means that The journal entry to record the reissuance would include a credit to:

Paid-In Capital from Treasury Stock for $860

Calculated as:

Reissued treasury stock $5,190

Less last month Treasury stock $4,330

Paid-In Capital from Treasury Stock 860

6 0
3 years ago
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