Part 1) A company has 100 employees who currently hold 1,000 stock options each. The exercise price is $25 per share. The options are currently in the money.

Calculate the maximum proceeds that the Company can receive from exercised stock options. In other words, assume that all stock options are exercised at the same point in time. Maximum $ proceeds from exercised stock options: _____________________

Part 2) 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 ($): ________________________