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A company has 3,000 convertible bonds (each has a face value of $1,000) that were issued at par with a coupon rate of 6% annual
A company has 3,000 convertible bonds (each has a face value of $1,000) that were issued at par with a coupon rate of 6% annual interest. Each bond can be converted to 20 shares of common stock. Assume a 30% income tax rate. Calculate the following amounts: Pre-tax annual interest expense ($): ______________________ After-tax annual interest expense ($): ________________________ Number of common shares converted (#): ________________________
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