(need E,F, and G answered)

A 20 year, $1000 par, 6.5% semi-annual coupon bond priced at 89.725% of par. The bond is callable after 6 years at 110.5% of par and has a conversion ratio of 45. The bond can be converted to stock anytime up until the call date.

a) (2 points) What is the bond's yield to maturity?7.50%

b) (2 points) What is the current yield?7.24%

c) (2 points) What is the yield to call?10.14%

d) (2 points) What is the conversion price?$22.22

Suppose you have accurately projected Lucky's free cash flow in year 6 to be $200 million. Assume the company's WACC is 6.5% and that the free cash flow grows at a constant rate of 3% annual rate after year 6. The company's net debt is forecasted at $2,300 million in 5 years at which time there will be 122.67 million shares outstanding.

e) (5 points) What is Lucky's enterprise value projection is year 5? What is the projected share price in year 5?

f) (2 points) What is the conversion value of the bond in year 5?

g) (5 Points) Assuming interest rates have fallen by 2% since the bond was issued, at what price will the bond trade at in year 5? Should you consider converting the bond or risk letting the bond be called within a year?