Question: This problem is based on the appendix to this chapter

This problem is based on the appendix to this chapter. The Eastman Kodak Corporation had an issue of convertible bonds outstanding in spring 2005 that had a coupon rate of interest and sold for $ 1,277.20 per bond. The interest payments were made semiannually. The cost of straight debt is 6.05% and the firm’s tax rate is 30%. In addition, the cost of new equity raised through the sale of the conversion option was 13.5%, what was the estimated cost of convertible bonds to the company?

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  • CreatedNovember 13, 2015
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