6) You are the finance manager of Trutone Corp. A bond with a face value of $1000 is convertible to common stock at a conversion ratio of 60. The stock is currently trading at $8.20 per share.

a) If you call the bonds, will the bondholders convert into shares or accept the call price? Explain.

b) What price must the stock surpass in order for the bondholders to convert?

8) A firm requires an investment of $30,000 and borrows $10,000 at 6%. If the return on equity is 15%, what is the firm's pre tax WACC?

9) A firm undertakes an investment that is financed with $10,000 of equity and $30,000 of debt. If the return on equity is 14%, the cost of debt is 7% and the tax rate is 25%, what is the firm's WACC?

12) Rogot Corp. has a market debt-equity ratio of .6 and a corporate tax rate of 35%, and pays 8% interest on its debt. By what amount does the interest tax shield from its debt lower Rogots WACC? Show your work.