Question: A firm issues 8% convertible loan notes that are redeemable in 3 years' time at a per-note nominal value of 100. Each loan note could

A firm issues 8% convertible loan notes that are redeemable in 3 years' time at a per-note nominal value of 100. Each loan

A firm issues 8% convertible loan notes that are redeemable in 3 years' time at a per-note nominal value of 100. Each loan note could alternatively be converted into 25 ordinary shares in 3 years' time. The cost of debt is 12%. Assuming that the share price in 3 years' time is 3.80 per share, what is the current market value of a convertible loan note? A $8271 B 573.47 $90.39 D 94.20 E None of the above Which of the following is most likely to lead to REDUCED shareholder wealth? A Announcement of an increase in the regular dividend B A decrease in the weighted-average cost of capital C. A decision to invest in a positive NPV project D Adjusting leverage away from the optimal capital structure E None of the above Question 16

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