Raylon Company just issued 30-year, 12 percent coupon bonds at $1,000 par value. Each bond has 70
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Raylon Company just issued 30-year, 12 percent coupon bonds at $1,000 par value. Each bond has 70 warrants attached to them and the exercise price for the warrants is $30. Current stock price is $25 and the constant dividend growth rate is 9%. The corporate tax rate is 35 percent. Assuming the warrants will be exercised at the end of year 8, what is the cost to the company of the exercise of the warrants for each bond?
Related Book For
Intermediate Accounting
ISBN: 978-0324592375
17th Edition
Authors: James D. Stice, Earl K. Stice, Fred Skousen
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