Explanation:
Since the cash flows are given in the question for the Investment A and the Investment B
So, the present value could be find out by multiplying the each year cash inflows with its discounted factor i.e 9%
So that the present value could come
The discount factor should be computed by
= 1 ÷ (1 + rate) ^ years
The attachment is shown below:
Answer: $100
Explanation:
Sometimes Debt instruments like Debentures and Bonds are convertible to shares in the company.
To calculate the Conversion Price, the following formula is used;
= Par Value / Conversion Ratio
= 1,000/10
= $100
Par value is usually $1,000 for such instruments.