1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
Sholpan [36]
3 years ago
11

Rizzo Company has debentures ($1,000 par) outstanding that are convertible into the company's common stock at a price of $25. Th

e convertibles have a coupon interest rate of 8% and mature in 12 years. In addition, the convertible debenture is callable at 110% of the par value. Straight debt of equivalent risk is yielding 12%. The company's common stock is selling at $22 per share. The company has a marginal tax rate of 40%. Determine the conversion value of the issue
Business
1 answer:
Phantasy [73]3 years ago
5 0

Answer:

A. $880

B. -$752.23

Explanation:

Calculation to determine the conversion value of the issue

First step is to calculate the Conversion ratio using this formula

Conversion ratio=Per value of security/ Conversion price

Let plug in the formula

Conversion ratio=$1,000/$25

Conversion ratio=40

Now let determine the Conversion value using this formula

Conversion value =Conversion ratio*Conversion price

Let plug in the formula

Conversion value=40*$22 per share

Conversion value=$880

Therefore the conversion value of the issue is $880

B. Calculation to determine the Straight bond value of the issue

Using financial calculator to the Present Value (PV)

PMT=8%*1,000=80

N=12 years

1/Y=12%

FV=1,000

PV=-$752.23

Therefore the Straight bond value of the issue is -$752.23

You might be interested in
Her current campaign has a total investment of $25,500, generates 1,500 conversions, and has a CPA of $17. Which plan, built in
Butoxors [25]

Answer:

A

Explanation:

An investment of $40,000 to generate 2,000 conversions and a CPA of $20 will help Molly with her marketing goal to generate more sales than other investment plan

4 0
3 years ago
What should you do when planning for college?
Vsevolod [243]

Answer:

a way to get a large amout of money (legally) to pay off the debt

more money for a place to live

and even more money to get food and other impoartant things to live

Explanation:

an alternative to stocks, but school never taught you what stocks are, so now get more money to buy a phone so u can have basic knowlede

and illegal alternative is to sell something adictive like drugs, cigs. or start a casino or scam pp, for money, or rob a bank

7 0
2 years ago
2 brothers, Joe and Bob get equal dollar amounts of securities as a gift. Joe immediately sells his securities and deposits the
raketka [301]

Answer:

Opportunity cost

Explanation:

The opportunity cost Bob's brother Joe $20,000. Remember, the term Opportunity cost refers to the cost (loss in this context) incurred when one forgoes an alternative best option–holding them in a brokerage account, in place for a less beneficial one.

Thus, Bob chose the best alternative over his brother.

8 0
3 years ago
All of the following are true regarding Plan Communications Management except for which one? A. The communications management pl
Ipatiy [6.2K]

Answer:

D. Data gathering, communication technology, communication methods, and expert judgment are some of the tools and techniques of this process.

5 0
3 years ago
Which of the following would you classify as a structural adaptation of an animal?
eimsori [14]

Answer:

The answer is D I would say.

8 0
3 years ago
Read 2 more answers
Other questions:
  • You are evaluating two different silicon wafer milling machines. The Techron I costs $276,000, has a three-year life, and has pr
    15·1 answer
  • Glenda is in the ninth grade, and she loves to write and share events that take place around her. She wants to become a journali
    6·1 answer
  • Solar Innovations Corporation bought a machine at the beginning of the year at a cost of $40,000. The estimated useful life was
    13·1 answer
  • Keynesian economics emphasized that economic downturns could be due to: inflation. T/F?
    8·1 answer
  • Which of the following would shift the supply of Green Bay Packers football jerseys to the left? a. The Green Bay Packers make i
    6·1 answer
  • Leighton has spent the last two hours going over customer surveys to see how well her company is achieving its goal of improving
    15·2 answers
  • Braynerd Chemicals sells 40 million shares of stock in an SEO—25 million being primary shares issued by the company and 15 milli
    9·1 answer
  • Tom O'Brien has a 2-stock portfolio with a total value of $100,000. $47,500 is invested in Stock A with a beta of 0.75 and the r
    10·1 answer
  • Lisle Hair Company keeps track of the gender and age of its customers so it can target e-mails to them and be sure to have the r
    14·1 answer
  • Unemployment can force the economy into an expansion. True False
    10·2 answers
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!