Pure Juice Ltd sold bonds to the public five years ago to finance its operation. The bond was recently quoted at 89% of face value. The bond has a total face value of GHC 8.5 million and it's currently priced to yield 9%. Pure Juice Ltd shares currently sell for GHC 14 per share. Fifty-three (53%) of Pure Juice Ltd 3.2 million shares are outstanding. To raise additional capital, Pure Juice Ltd issued 500 preference stock that paid GHC 6.5 annually per share and sold for GHC 95 per share. Treasury bills pay 8% and the expected return on the market is 17%. Financial experts have estimated that Pure Juice Ltd has a beta of 0.92. If the corporate tax rate is 36%.

Pure Juice Ltd sold bonds to the public five years ago to finance its operation. The bond was recently quoted at 89% of face value. The bond has a total face value of GHC 8.5 million and it's currently priced to yield 9%. Pure Juice Ltd shares currently sell for GHC 14 per share. Fifty-three (53%) of Pure Juice Ltd 3.2 million shares are outstanding. To raise additional capital, Pure Juice Ltd issued 500 preference stock that paid GHC 6.5 annually per share and sold for GHC 95 per share. Treasury bills pay 8% and the expected return on the market is 17%. Financial experts have estimated that Pure Juice Ltd has a beta of 0.92. If the corporate tax rate is 36%.

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter20: Financing With Derivatives

Section: Chapter Questions

Problem 16P

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