Question
Phillips Inc. issued some 30-year ,$500 par value , 8 % coupon convertible debentures 15 year ago. Interest is paid annually , and the next
Phillips Inc. issued some 30-year ,$500 par value , 8 % coupon convertible debentures 15 year ago. Interest is paid annually , and the next interest payment is one year from now. The conversion price is $5.
a. Find conversion value today of these debentures it the stock price is currently $8 a share.
b. Determine the investment value today of these debentures if interest rate on comparable non convertible debentures is 10% per year.
c. If the present premium is $60, what is the present percentage conversion premium
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Principles Of Corporate Finance
Authors: Lawrence J. Gitman, Sean M. Hennessey
2nd Canadian Edition
0321452933, 978-0321452931
