Multiple Choice
Mills Trucking Inc. has debentures ($1,000 par value) outstanding that are convertible into the company's common stock at a price of $25. The convertibles have a coupon interest rate of 8% and mature 20 years from today. Straight debt of equivalent risk is yielding 10% today. The company's common stock today is selling at $23 a share. Calculate the straight-bond value of the issue.
A) about $830
B) about $1,000
C) about $950
D) about $1,500
Correct Answer:
Verified
Correct Answer:
Verified
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