財務(wù)管理：理論與實踐21show-免費閱讀
【正文】 20xx Harcourt, Inc. All rights reserved. ?Warrants usually provide for fewer mon shares than do convertibles. ?Bonds with warrants typically have much higher flotation costs than do convertible issues. ?Bonds with warrants are often used by small startup firms. Why? 21 45 Copyright 169。 20xx Harcourt, Inc. All rights reserved. kd (AT) = 12%() = %. Convertibles Step 2: Find the aftertax cost of straight debt. 21 37 Copyright 169。 20xx Harcourt, Inc. All rights reserved. ?The floor value is the higher of the straight debt value and the conversion value. ?Straight debt value0 = $. ?CV0 = $800. Floor value at Year 0 = $. What is meant by the floor value of a convertible? What is the floor value at t = 0? At t = 10? 21 29 Copyright 169。 straight debt issue would require a 12% coupon. ?Call protection = 5 years and call price = $1,100. Call the bonds when conversion value $1,200, but the call must occur on the issue date anniversary. ?P0 = $20。 20xx Harcourt, Inc. All rights reserved. ?When exercised, each warrant will bring in the exercise price, $25. ?This is equity capital and holders will receive one share of mon stock per warrant. ?The exercise price is typically set some 20% to 30% above the current stock price when the warrants are issued. Will the warrants bring in additional capital when exercised? 21 16 Copyright 169。 20xx Harcourt, Inc. All rights reserved. ?A warrant is a longterm call option. ?A convertible consists of a fixed rate bond (or preferred stock)plus a longterm call option. How can a knowledge of call options help one understand warrants and convertibles? 21 8 Copyright 169。21 1 Copyright 169。 20xx Harcourt, Inc. All rights reserved. ?P0 = $20. ?kd of 20year annual payment bond without warrants = 12%. ?50 warrants with an exercise price of $25 each are attached to bond. ?Each warrant’s value is estimated to be $3. Given the following facts, what coupon rate must be set on a bond with warrants if the total package is to sell for $1,000? 21 9 Copyright 169。 20xx Harcourt, Inc. All rights reserved. No. As we shall see, the warrants have a cost which must be added to the coupon interest cost. Because warrants lower the cost of the acpanying debt issue, should all debt be issued with warrants? 21 17 Copyright 169。 D0 = $。 20xx Harcourt, Inc. All rights reserved. ?Straight debt value10 = $. ?CV10 = $1,. Floor value10 = $1,. ?A convertible will generally sell above its floor value prior to maturity because convertibility constitutes a call option that has value. 21 30 Copyright 169。 20xx Harcourt, Inc. All rights reserved. WACC (with = (%) + (%) convertibles) + (16%) = %. WACC (without = (%) + (16%) convertibles) = %. Convertibles Step 3: Calculate the WACC. 21 38 Copyright 169。 20xx Harcourt, Inc. All rights reserved. How do convertibles help minimize agency costs? ?Agency costs due to conflicts between shareholders and bondholders ?Asset substitution (or baitandswitch). Firm issues low cost straight debt, then invests in risky projects ?Bondholders suspect this, so they charge high i
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