Question

Gregg Company recently issued two types of bonds. The first issue consisted of 20-year straight (no...

Gregg Company recently issued two types of bonds. The first issue consisted of 20-year straight (no warrants attached) bonds with an 7% annual coupon. The second issue consisted of 20-year bonds with a 5% annual coupon with warrants attached. Both bonds were issued at par ($1,100). What is the value of the warrants that were attached to the second issue? Round your answer to the nearest cent.

Business   Finance   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Neubert Enterprises recently issued $1,000 par value 15-year bonds with a 7% coupon paid annually and...
Neubert Enterprises recently issued $1,000 par value 15-year bonds with a 7% coupon paid annually and warrants attached. These bonds are currently trading for $1,000. Neubert also has outstanding $1,000 par value 15-year straight debt with an 8% coupon paid annually, also trading for $1,000. What is the implied value of the warrants attached to each bond? Do not round intermediate calculations. Round your answer to the nearest cent.
Neubert Enterprises recently issued $1,000 par value 15-year bonds with a 7% coupon paid annually and...
Neubert Enterprises recently issued $1,000 par value 15-year bonds with a 7% coupon paid annually and warrants attached. These bonds are currently trading for $1,000. Neubert also has outstanding $1,000 par value 15-year straight debt with a 10% coupon paid annually, also trading for $1,000. What is the implied value of the warrants attached to each bond? Do not round intermediate calculations. Round your answer to the nearest cent.
A company recently issued $1,000 par value 10-year bonds with a 5% coupon paid annually with...
A company recently issued $1,000 par value 10-year bonds with a 5% coupon paid annually with warrants attached. These bonds are currently trading for $1,000. The company also has outstanding $1,000 par value 10-year regular debt with an 8% coupon paid annually, also trading for $1,000. What is the implied value of the warrants attached to each bond?
ABC Company is planning to issue 20,000 bonds with warrants attached. The bonds will make annual...
ABC Company is planning to issue 20,000 bonds with warrants attached. The bonds will make annual interest payments of 6.8% and will have a 20-year maturity. There will be 75 warrants attached to each bond, with each warrant giving the right to purchase one share of stock at a price of $12. A similar straight-debt issue would require a 10% coupon rate. Total assets before issuance equal $120 million, with $50 million of liabilities. What is the value of the...
Calmer Inc. plans to issue 20-year bonds with annual interest payments and with 20 warrants attached....
Calmer Inc. plans to issue 20-year bonds with annual interest payments and with 20 warrants attached. Each warrant is expected to have a value of $0.50. A similar straight-debt issue would require an 12% coupon. What coupon rate should be set on the bonds-with-warrants so that the bond will sell for $1,000?
ABC Company is planning to issue 20,000 bonds with warrants attached. The bonds will make annual...
ABC Company is planning to issue 20,000 bonds with warrants attached. The bonds will make annual interest payments of 6.8% and will have a 20-year maturity. There will be 75 warrants attached to each bond, with each warrant giving the right to purchase one share of stock at a price of $12. A similar straight-debt issue would require a 10% coupon rate. Total assets before issuance equal $120 million, with $50 million of liabilities. What is the value of the...
) Bondigo Beverage Inc. is planning to issue two types of 20-year, noncallable bonds to raise...
) Bondigo Beverage Inc. is planning to issue two types of 20-year, noncallable bonds to raise a total of $8 million, $4 million from each type of bond. First, 4,000 bonds with a 10% semiannual coupon will be sold at their $1,000 par value to raise $4,000,000. These are called "par" bonds. Second, Original Issue Discount (OID) bonds, also with a 20-year maturity and a $1,000 par value, will be sold, but these bonds will have a semiannual coupon of...
Blackstone Energy is planning to issue two types of 25-year, non-callable bonds to raise a total...
Blackstone Energy is planning to issue two types of 25-year, non-callable bonds to raise a total of $6 million. First 3,000 bonds with a 10% annual coupon rate will be sold at their $1,000 par value to raise $3 million. Second, the original issue discount (OID) bonds, also with a 25-year maturity and a $1,000 par value, will be sold, but these bonds will have a nominal coupon of only 7.65%, also with annual payments. The OID bonds must be...
Srorm Software wants to issue $80 million ($800 x 100,000 bonds) in new capital to fund...
Srorm Software wants to issue $80 million ($800 x 100,000 bonds) in new capital to fund new opportunities. If Storm raised the $80 million of new capital in a straight-debt 20-year bond offering, Storm would have to offer an annual coupon rate of 12%. However, Storm's advisers have suggested a 20-year bond offering with warrants. According to the advisers, Storm could issue 8% annual coupon-bearing debt with 24 warrants per $800 face value bond. Storm has 10 million shares of...
Bettanin Corporation recently issued 20-year bonds. The bonds have a coupon rate of 8 percent and...
Bettanin Corporation recently issued 20-year bonds. The bonds have a coupon rate of 8 percent and pay interest semiannually. Also, the bonds are callable in 6 years at a call price equal to 115 percent of par value of $1,000. The par value of the bonds is $1,000. If the yield to maturity is 7 percent, what is the yield to call?
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT