In December 2022, Pronghorn Corp. decided to issue 100,000 convertible bonds, maturing in December 2032. The bonds have a face value of $1,000 and promise an annual coupon payment of 6.00 percent. The conversion ratio of these bonds is 25.86, and it is known that Pronghorn Corp's common shares were trading at $35 in December 2022. These bonds are rated A-, and straight bonds from similar companies with similar maturity yield 9 percent. The current market price of these bonds is $1,066. Calculate the conversion price, conversion value, SBV, floor value, and conversion premium for these bonds. (Round answers to 2 decimal places, e.g. 125.25 or 25.25%.) Conversion price Conversion value $ SBV Floor value Conversion premium $ %

In December 2022, Pronghorn Corp. decided to issue 100,000 convertible bonds, maturing in December 2032. The bonds have a face value of $1,000 and promise an annual coupon payment of 6.00 percent. The conversion ratio of these bonds is 25.86, and it is known that Pronghorn Corp's common shares were trading at $35 in December 2022. These bonds are rated A-, and straight bonds from similar companies with similar maturity yield 9 percent. The current market price of these bonds is $1,066. Calculate the conversion price, conversion value, SBV, floor value, and conversion premium for these bonds. (Round answers to 2 decimal places, e.g. 125.25 or 25.25%.) Conversion price Conversion value $ SBV Floor value Conversion premium $ %

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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On April 1, 2014, Fredriksen Corp. sold a $700 million bond issue to finance the purchase of a new distribution facility. These bonds were issued in $1,000 denominations with a maturity date of April 1, 2034. The bonds have a coupon rate of 8.00% with interest paid semiannually. Required: a) Determine the value today April 1, 2024 of one of these bonds to an investor who requires a 12 percent return on these bonds. Why is the value today different from the par value? b) Assume that the bonds are selling for $925.00. Determine the current yield and the yield-to-maturity. Explain what these terms mean. c) Explain what layers or textures of risk play a role in the determination of the required rate of return on Fredriksen's bonds.
Auerbach Inc. issued 8% bonds on October 1, 2021. The bonds have a maturity date of September 30, 2031 and a face value of $300 million. The bonds pay interest each March 31 and September 30, beginning March 31, 2022. The effective interest rate established by the market was 10%. How much cash interest does Auerbach pay on March 31, 2022? (Round your answer to 2 decimal places.) Top of Form Multiple Choice $24.00 million. $12.00 million. $30.00 million. $15.00 million.
On January 1,2020, ABC Company issued P 10,000,000 convertible bonds with a stated rate of 12% at 110. The principal of the bonds is payable on December 31, 2024. Interest on the bonds is payable annually starting December 31,2020. Each P 5,000 bond is convertible into 20 ordinary shares of P 50 par. Without the bond conversion privilege, the bonds would have sold to yield 10%.On December 31,2021 after paying periodic interests, half of the bonds issued were converted to ordinary shares. On October 1,2023, half of the remaining bonds were retired at 102 plus accrued interest. Without the bond conversion privilege, the bonds are quoted at 101.How much was credited to the share premium- ordinary account at the time of conversion of bonds on December 31,2021?
Exam Corp. is in need of cash. On 1/1/2023 Exam Corp. issues bonds with a $350,000 face value. The bonds have an 7.50% coupon rate. The market rate is 18%. The bonds have a life of 6 years, and are compounded semiannually. At the time of issuance, the price of the bonds is correctly calculated to be $218,420. All answers below can be rounded to the nearest dollar. What is the journal entry Exam Corp. will record on 6/30/23? Dr. Interest Revenue $19,658 Cr. Cash $13,125 Cr. Discount $6,533 Dr. Interest Expense $19,658 Cr. Discount $6,592 Cr. Cash $26,250 Dr. Interest Payable $19,658 Cr. Premium $6,592 Cr. Cash $26,250 Dr. Interest Expense $19,658 Cr. Cash $13,125 Cr. Premium $6,533 Dr. Interest Expense $19,658 Cr. Cash $13,125 Cr. Discount $6,533
Swoot, Inc issued serial bonds on January 1, 2020 that mature 5 years later on December 31, 2024. There are 2,500 bond issued with a face value per bond of $1,000. The stated rate is 8% and the market rate is 9%. In the box below, provide the journal entry for December 31, 2022. Round all numbers to the whole dollar using 5/4 rounding and no commas, enter debits as positive number and enter credits in brackets "()."
Auerbach Incorporated issued 4% bonds on October 1, 2024. The bonds have a maturity date of September 30, 2034 and a face value of $300 million. The bonds pay interest each March 31 and September 30, beginning March 31, 2025. The effective interest rate established by the market was 6%. How much cash interest does Auerbach pay on March 31, 2025? Multiple Choice O $12.0 million $9.0 million $6.0 million $18.0 million
On September 30, 2023, Sunland Inc. issued $3,280,000 of 10-year, 8% convertible bonds for $3,772,000. The bonds pay interest on March 31 and September 30 and mature on September 30, 2033. Each $1,000 bond can be converted into 80 no par value common shares. In addition, each bond included 20 detachable warrants. Each warrant can be used to purchase one common share at an exercise price of $15. Immediately after the bond issuance, the warrants traded at $3 each. Without the warrants and the conversion rights, the bonds would have been expected to sell for $3,444,000. On March 23, 2026, half of the warrants were exercised. The common shares of Sunland were trading at $20 each on this day. Immediately after the payment of interest on the bonds, on September 30, 2028, all bonds outstanding were converted into common shares. Assume the entity follows IFRS. (e) Your answer is partially correct. Prepare the journal entry to account for the exercise of the warrants on March 23, 2026. (Credit…
On January 1, 2024, ABC Corp. issued 54 million of 10 year bonds at an 8%stated interest rate to be paid annually. ABC Corp. issued the bonds for S3, 501, 514 since the market rate of interest was 10% . What is the carryingvalue of the bond that ABC Corp. would report on its December 31, 2024balance sheet? (round to the nearest dollar) S3,531,665S3, 500,000S3,526,438S3,564,832S4,000,000
Please help me. Thankyou.
1. On January 1, 2020, CHAR Company issued P 10,000,000 convertible bonds with a stated rate of 12% at 110. The principal of the bonds is payable on December 31, 2024. Interest on the bonds is payable annually starting December 31, 2020. Each P 5,000 bond is convertible into 20 ordinary shares of P 50 par. Without the bond conversion privilege, the bonds would have sold to yield 10%. On December 31, 2021, after paying periodic interests, half of the bonds issued were converted to ordinary shares. On October 1, 2023, half of the remaining bonds were retired at 102 plus accrued interest. Without the bond conversion privilege, the bonds are quoted at 101. How much was credited to the share premium- ordinary account at the time of conversion of bonds on December 31, 2021? (For present value factors, do not round off) 2. On January 1, 2021, MAMA Company sold the property to the PAPA Company. There was no established exchange price for the property, and PAPA gave MAMA a P2,000,000…
Florence Inc. issued 8,000, 5-year convertible bonds of $2,000 each for $4,000,000 at the beginning of 2021. The bonds have a stated rate of interest of 9% and interest is payable annually. Each bond can be convertible into 100 shares with a par value of $10. The market rate of similar nonconvertible debt is 10%. Determine the fair value of the equity component using the “with-and-without” method is a. $3,848,288 b. $2,483,600 c. $1,365,688 d. $151,712
Libertine Co. issued $10,000,000 of 9%, 10-year, convertible bonds on January 1, 2020. Interest is paid annually on December 31. At the time of the bonds issuance, the market rate for non-convertible bonds was 10%. Each $1,000 bond is convertible into 15 common shares. In 2025, half of the bondholders decided to convert their bonds into common shares. How many shares were issued as a result of the conversion? Question 10 options: 75,000 140,783 15,000 150,000

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