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Pittsburgh Steel Company has a convertible bond outstanding, trading in the marketplace at $870. The par...

Pittsburgh Steel Company has a convertible bond outstanding, trading in the marketplace at $870. The par value is $1,000, the coupon rate is 8 percent, and the bond matures in 25 years. The conversion price is $60 and the company’s common stock is selling for $52 per share. Interest is paid semiannually.

If the interest rate on similar bonds that are not convertible are currently yielding 12 percent, what will be the pure bond value of the Pittsburgh Steel Company bonds? (Use semiannual analysis.) Use Appendix B and Appendix D as an approximate answer, but calculate your final answer using the formula and financial calculator methods. (Do not round intermediate calculations. Round your final answer to 2 decimal places.)

What is the BOND VALUE?

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Answer #1

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Home nert Page Layout Formulas Data Review View dd-Ins Σ AutoSum Cut ー E ゴWrap Text Sort &Find & 2 ClearFe Select Edting ta copy ▼ ㆆ ▼ ▼ Formatting, as Table w styles. B า 프 . Ej-., Δ. : r_一 逻锂函Merge & Center. $, % , 弼,8 conditional Format . Cell Insert Delete Format Cells Format Painter Number Alignment Clipboard CK20 CH ca CR CS CT CU CL CM CN CO CP CJ CK PURE VALUE OF BOND = PRESENT VALUE OF COUPONS + PRESENT VALUE OF MATURITY VALUE PURE VALUE OF BOND-80/2 X PVI FA @ 12%/2, 25*2 YEARS + 1000 X PVIF @ 12%/2, 25*2 YEARS PURE VALUE OF BOND = 40 X PVI FA @ 6%, 50 YEARS + 1000 X PVIF @6%, 50 YEARS PURE VALUE OF BOND = 40 X 15.762 + 1000 x 0.054 PURE VALUE OF BOND = 684.48 8 10 12 13 14 15 16 17 18 19 20 21 NOTE AS SEMI ANNUAL COUPONS ARE PAID, INTEREST WILL BE 40, RATE WILL BE 6% AND NO OF PERIODS WILL BE 50 23 24 25 26 / EUAC AW PM LIFE LP, IP, MRP. INFLATION YIELD | WARRANTrefund bond . CLEAN INVOICE PRICE , Sheet1 BANKING NOTE BIDDING, UNDERWRITING (4 커 , Sheet2 . AFN

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