convertible and wacc

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					Convertibles and WACC
Balance Sheet

Assets                Book         Market Liabilities           Book         Market             Convert           Total

Cash                   511           511   Debt                 3330           3330 $               375   $ 3,704.71
Other short term      1036          1036   Convertibles          431            445
Long term             3243          6448   Equity               1029           4220 $               70 $ 4,289.87
Total                 4790          7995   Total                4790           7995                 445 7994.5765

Tax rate               35% assumed
Beta                   1.66 from biz.yahoo.com
Treasury                4%
Mkt risk premium     5.50% assumed


Note: Breaking Down a Convertible Bond
Coupon rate on Convertible Bond =                             3.00%
Market Interest Rate on Straight Bond of same Risk =          5.63% yield on straight SEE bond
Price of Convertible Bond =                                   1031.5
Maturity of Convertible Bond =                                     6 time to first put

Value of Straight Bond Portion =                          $   869.39
Value of Conversion Option =                              $   162.11   Or see links on giddy.org to value the convertible directly
                                                          $ 1,031.50
                  WACC     Convert

                   3.66%
                            5.15%
                 13.13%
                  8.74%




the convertible directly
Conversion ratio    14.2857
Stock price              49
"Intrinsic value"       700

				
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