a- P17-9 CONVERSION (OR STOCK) VALUE What is the conversion (or stock) value of each of the following convertible bonds?

1. A $1,000-par-value bond that is convertible into 25 shares of common stock. The common stock is currently selling for $50 per share.
2. A $1,000-par-value bond that is convertible into 12.5 shares of common stock. The common stock is currently selling for $42 per share.
3. A $1,000-par-value bond that is convertible into 100 shares of common stock. The common stock is currently selling for $10.50 per share.

b- P18-1 TAX EFFECTS OF ACQUISITION Connors Shoe Company is contemplating the acquisition of Salinas Boots, a firm that has shown large operating tax losses over the past few years. As a result of the acquisition, Connors believes that the total pretax profits of the merger will not change from their present level for 15 years. The tax loss carryforward of Salinas is $800,000, and Connors projects that its annual earnings before taxes will be $280,000 per year for each of the next 15 years. These earnings are assumed to fall within the annual limit legally allowed for application of the tax loss carryforward resulting from the proposed merger (see footnote 2 earlier in this chapter). The corporate tax rate is 21%.

1. If Connors does not make the acquisition, what will be the company's tax liability and earnings after taxes each year over the next 15 years?
2. If the acquisition is made, what will be the company's tax liability and earnings after taxes each year over the next 15 years?
3. If Salinas can be acquired for $350,000 in cash, should Connors make the acquisition, judging on the basis of tax considerations? (Ignore present value.)

c- P18-16 BANKRUPTCY LEGISLATION: WAGE-EARNER PLAN Ben Stine is in a financial position where he owes more than he earns each month. Due to his lack of financial planning and a heavy debt load, Ben started missing payments and saw his credit rating plunge. Unless corrective action is taken, personal bankruptcy will follow.

Ben recently contacted his lawyer to set up a wage earner plan with his creditors and establish a debt repayment schedule that is workable in light of his personal income. His creditors have all agreed to a plan under which interest payments and late fees will be waived during the repayment period. The process would have Ben make payments to the court, which then will pay off his creditors.

Ben has outstanding debt of $56,000. His creditors have set a repayment period of four years during which monthly principal payments are required. They have waived all interest charges and late fees. Ben's yearly take-home income is $61,200.

1. Calculate the monthly debt repayment amount.
2. Determine how much excess income Ben will have each month after making these payments.

d-

P193 EXCHANGE RATES Fred Nappa is planning to take a wine-tasting tour through Ital}! this summer. The tour Will cost 2,750 euros (E) and includes transportation, hotels, and a guide. Fred estimates that round- trip airfare from his home in North Carolina to Rome, Italy, will be $1,490; he also will incur another $300 {U.S.) in incidental travel expenses. Fred estimates the cost of meals in Ital).r to be about 500, and he will take an additional $1,000 to cover miscellaneous expenditures. Currently; the exchange rate is 1.3411[$/) or E.7456($/). a. Determine the total dollar cost of the trip to Italy. b. Determine the amount of euros (E) Fred will need to cover meals and miscellaneous expenditures