Linfield Company has assets of $200 million and long term debt of $110 million The debt consists primarily of callable debentures having interest rates ranging from 10 to 12 (Callable debentures are bonds that a company can recall and pay off at any time it chooses ) Over the last couple of years, ...

Linfield should consider its investment opportunities If the company has the opportunity to invest i ...

Linfield Company has assets of $200 million and long-term debt of $110 million. The debt consists primarily

Question:

Linfield Company has assets of $200 million and long-term debt of $110 million. The debt consists primarily of callable having interest rates ranging from 10% to 12%. (Callable are bonds that a company can recall and pay off at any time it chooses.) Over the last couple of years, the general level of interest rates has decreased by about 2.5%. Linfield could issue new debt today at a rate of approximately 8%. Also, over the last two years, Linfield’s stock price has increased about 30%. How might this information affect Linfield’s management when it considers financing decisions for the future?

Debentures
Debenture DefinitionDebentures are corporate loan instruments secured against the promise by the issuer to pay interest and principal. The holder of the debenture is promised to be paid a periodic interest and principal at the term. Companies who...