 Investor:
Annie’s Hegg
 Bond’s issued
by Atilier Industries
 Par Value $1000 with total maturity 30 years
( 25years remaining)
 8%
coupon interest rate , convertible into 50
shares of common stock, and can be called
anytime at $ 1,080
 Inflation rate 5% is likely increase to a 6%
annual rate/
 If
the price of the common stock into which
bond is convertible rises to $30/share after 5
years and the issuer calls the bonds at 1080.
 Let the bond called away from her or should
we convert it into commons stock??
 Stock
par value : $1000/50stock = $20/stock
 Value for future (next 25years):
 B25 = $80 x(FVIFA6%,25yrs) +
$1000x(FVIF6%,25yrs)
=$80 x 54.8645
+ $1000 x 2.4919
=$ 6881.06
 Called Bond issued at 1.080
 Convert to stock = ($20+30)* 50= $2,500
 Stock FVIF6%,25yrs = 2,500 x 4.2919 = $
10729.75

We should convert it in to common stock.
 Stock
par value : $1000/50stock = $20/stock
 Bo = $80 x(PVIFA6%,25yrs) +
$1000x(PVIF6%,25yrs)
=$80x 12.7834
+ $1000 x 0.233
=$ 1255.672
 Called Bond issued at 1.080
 Convert to stock = ($20+30)* 50= $2.500

We should convert it in to common stock.