Question: anyone know how to do it in step by step I will thumb it up A B D E F G H 1 Nm 4
anyone know how to do it in step by step I will thumb it up
A B D E F G H 1 Nm 4 5 ExxonMobil is considering issuing a 15-year convertible bond that will be priced at its $1,000 par value. The bonds have a 6.5% annual coupon rate, and each bond can be converted into 20 shares of common stock. The stock currently sells at $30 a share, has an expected dividend in the coming year of $3, and has an expected constant growth rate of 5.5%. What is the estimated floor price of the convertible at the end of Year 3 if the required rate of return on a similar straight-debt issue is 9.5%? 6 7 8 9 10 11 12 6.50% 65 13 14 Bond par value Bond maturity Evaluation year, t NPER Straight-debt yield 1,000.00 15.00 3.00 12.00 9.50% Convertible coupon PMT Conversion ratio (shares) Stock price Growth rate 20 15 $30.00 5.50% 16 17 18 19 Stock price Year 3 straight debt value Year 3 Conversion value in Year 3 Floor price/value 20 21 22 A B D E F G H 1 Nm 4 5 ExxonMobil is considering issuing a 15-year convertible bond that will be priced at its $1,000 par value. The bonds have a 6.5% annual coupon rate, and each bond can be converted into 20 shares of common stock. The stock currently sells at $30 a share, has an expected dividend in the coming year of $3, and has an expected constant growth rate of 5.5%. What is the estimated floor price of the convertible at the end of Year 3 if the required rate of return on a similar straight-debt issue is 9.5%? 6 7 8 9 10 11 12 6.50% 65 13 14 Bond par value Bond maturity Evaluation year, t NPER Straight-debt yield 1,000.00 15.00 3.00 12.00 9.50% Convertible coupon PMT Conversion ratio (shares) Stock price Growth rate 20 15 $30.00 5.50% 16 17 18 19 Stock price Year 3 straight debt value Year 3 Conversion value in Year 3 Floor price/value 20 21 22
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