***Evaluate business case, answering USING EXCEL**

(Make sure to show calculations)

-required return: 12%

Bobcat Windpower needs to raise cash and has created a convertible debt note for purchase. Bobcat needs to raise $5,000,000. You can purchase $1,000,000 of Bobcats convertible debt. The debt note will mature in 10 years and pay 8.75% annual interest. If by the end of 10 years the note has not converted to equity all investors will receive the interest payment that is due for that year, plus all of the principal, less fees, that they have invested. Bobcat debt will be selling at par. That means you can purchase $1,000,000 worth of debt for $1,000,000. Because this investment is close to a junk rating your company will require an internal rate of return of at least 12% profits once you have recouped your initial investment. -our firm will be taxed at 15% of all