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The common stock of the Blue Sky Corporation earns $3 per share, has a 60 percent dividend payout, and sells at a P/E ratio of 8.333. Blue Sky wishes to offer $10 million of 9 percent, 20 year convertible debentures with an initial conversion premium of 20 percent and...

Faversham Fish Farm has outstanding a 7.75 percent, 20 year convertible debenture issue. Each $1,000 debenture is convertible into 25 shares of common stock. The company also has a straight debt issue outstanding of the same approximate maturity, so it is an easy...

The Rambutan Fruit Company needs to raise $10 million by means of a debt issue. It has the following two alternatives: a 20 year, 8 percent convertible debenture issue with a $50 conversion price and $1,000 face value; or a 20 year, 12 percent straight debt issue....

Jenni Shover, Inc., has warrants outstanding that allow the holder to purchase three shares of common stock for a total $60 for each warrant that is held. Currently, the market price per share of Jenni Shover common stock is $18. However, investors hold the following...

focus on ETHICS Accruals Management On June 2, 2010, Diebold, Inc., agreed to pay a $25 million fine to settle accounting fraud charges brought by the U.S. Securities and Exchange Commission (SEC). According to the SEC, the management of the Ohio based manufacturer of...

focus on PRACTICE The Ebb and Flow of Commercial Paper The difficult economic and credit environment in the post–September 11 era, combined with historically low interest rates and a deep desire by corporate issuers to reduce exposure to refinancing risk, had a...

The Shelby Gaming Manufacturing Company has experienced a severe cash squeeze and needs $200,000 over the next 90 days. The company has already pledged its receivables in support of a loan. However, it does have $570,000 in unencumbered inventories. Determine the best...

The Bone Company has been factoring its accounts receivable for the past 5 years. The factor charges a fee of 2 percent and will lend up to 80 percent of the volume of receivables purchased for an additional 1.5 percent per month. The firm typically has sales of...

Solid Arity Corporation is a chain of appliance stores in Chicago. It needs to finance all of its inventories, which average the following during the four quarters of the year:   QUARTER   1 2 3 4 Inventory level (in thousands) $1,600 $2,100 $1,500 $3,200...