Dagabie
02-08-10, 05:36 PM
I need help to understand the calculation of cost of debt capital for various type of debt capital.
Qn.
U.S.A LTD has issued convertible bonds of $50billion at which are either repayable at par or converted into ordinary stock at $250 each. Current price of bond is $102.97 ex int. current share price is $220 ex div. dividend of $10 have just been paid and it is expected to grow 10% p.a. tax is 33%.
What is the cost of convertible debt?
Qn.
U.S.A LTD has issued convertible bonds of $50billion at which are either repayable at par or converted into ordinary stock at $250 each. Current price of bond is $102.97 ex int. current share price is $220 ex div. dividend of $10 have just been paid and it is expected to grow 10% p.a. tax is 33%.
What is the cost of convertible debt?