Question
Loan Amount (USD 000,000) 50 LIBOR 3% Premium (spread) over LIBOR 1% All-in Interest Rate 4% Todays Share Price $2.00 Term (years) 10 Conversion Price
| Loan Amount (USD 000,000) | 50 |
| LIBOR | 3% |
| Premium (spread) over LIBOR | 1% |
| All-in Interest Rate | 4% |
| Todays Share Price | $2.00 |
| Term (years) | 10 |
| Conversion Price | $4.00 |
| Number of shares on conversion (USD 000,000) | 25 |
|
|
|
Complete the following table. For Overall Compound ROI or IRR utilize all 10 years of cash flows, including initial loan outflow, annual interest payments received on the loan in years 1 through 10, and the values of shares in year 10.
| Annual growth in share price | Share price in year 10 | Value of shares (000,000) | Overall Compound ROI or IRR |
| 8% |
|
|
|
| 9% |
|
|
|
| 10% |
|
|
|
| 11% |
|
|
|
| 12% |
|
|
|
| 13% |
|
|
|
| 14% |
|
|
|
| 15% |
|
|
Hey I just need help figuring out the
"Share Price in Year 10" It is the Future Value by using present value, rate, and periods. I dont know the pv for this to caluclate the fv
"Value of Shares" is the share price multiplied by the conversion shares (25,000,000)
"Overall Compound ROI or IRR" is T=0 (bond price), T=1-10; Interest, T=10: value of shares
If anyone can explain how they got it that would really help
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Valuation Measuring And Managing The Value Of Companies
Authors: McKinsey & Company Inc., Tom Copeland, Tim Koller, Jack Murrin
3rd Edition
0471361909, 978-0471361909
