...there are options and warrants outstanding Aswath Damodaran 1 Equity Value and Per Share Value: A Test l Assume that you have done an equity valuation of Microsoft. The total value for equity is estimated to be $ 170 billion and there are 1204 million shares outstanding. What is the value per share? 2 An added fact l On September 30, 1997, Microsoft had 258 million options outstanding, granted to employees over time. These options had an average exercise price of $ 42 (the current stock price i $ 140). Estimate the value per share. 3 Equity Value and Per Share Value l l The conventional way of getting from equity value to per share value is to divide the equity value by the number of shares outstanding. This approach assumes, however, that common stock is the only equity claim on the firm. In many firms, there are other equity claims as well including: – warrants, that are publicly traded – management and employee options, that have been granted, but do not trade – conversion options in convertible bonds – contingent value rights, that are also publicly traded. l The value of these non-stock equity claims has to be subtracted from the value of equity before dividing by the number of shares outstanding. 4 Warrants l l l A warrant is a security issued by a company that provides the holder with the right to buy a share of stock in the company at a fixed price during the life of the warrant. A warrant is therefore a long term...
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...Title UNITED STATES V. CURLIN Citation U.S. App. LEXIS 8426 (7th Cir. 2011 Unpub.) UNITED STATES of America, Appellee, V. Marcus CURLIN, Appellant No. 10-3033 History Marcus CURLIN was ordered by the Small Claims Court judge to vacate the property due to failure to pay rent. At the time of the eviction the deputies observed firearms in the house and Curlin was charged with possession of firearms due to earlier felony convictions which bar him from owning firearms. The defendant attempted to suppress the evidence on the plain-view doctrine and the violation of privacy, under the 4th Amendment to the Constitution, as the deputies entered his premises without a search warrant. The Seventh Circuit Court affirmed the decision of the trial court by denying the motion to suppress. Facts On October 17th, 2008, Curlin’s landlord filed a small claim action against Curlin, seeking possession of Curlin’s leased residence for failure to pay rent. The Notice of the Claim for possession of Real Estate and Summons were served on Curlin by mail and by delivery to his residence, however Curlin failed to appear before the Court as ordered. Due to Curlin’s failure to appear, he was the served with a second notice to appear before Court on the next date but he again failed to appear. Small claim court entered a judgment in favor of landlord. The clerk of the court based on the order issued an eviction order, ordering Curlin to vacate the property on or before 6:00 p.m. on Nov...
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...sometimes blatantly explicit lyrics in music today get overlooked or construed as being harmless. It is most definitely not harmless; something needs to be done about it. For my action/research project, I chose to assess the lyrics and album covers of popular music artists and to discuss the ways in which women are portrayed. It is extremely easy to find music CDs containing sexism. Look in your own collection; that is what I did. Lorde (1995) states that, “Sexism is the belief in the inherent superiority of one sex over all others and thereby the right to dominance” (cited in Gollnick & Chinn, 1998, p. 130). Two of the most outstanding examples of albums of this type that I found are Cherry Pie (Columbia Records Inc., 1990) by Warrant, and Great White’s … Twice Shy (Capitol Records Inc., 1989). Both of these, in addition to having very suggestive lyrics, also have cover graphics that portray women as sex objects; see Appendix A. I will start with a short discussion of Cherry Pie, both the cover graphics and the songs. The cover shows a waitress...
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...Question 1 a) The starting point for this case is to determine the total market values for Virginia May. Therefore, the relevant information about notes payable, long term debt and total common equity are taken into consideration, which are provided in Table 1 of the case. Table 2 indicates a total market values of 392.650.378,84€, which is 81.637.621,16€ les compared to the belonging book values. While the book value of notes payables is the same for the market value, the long term debt as well as the total common equity differ in this respect. Using the formula provided in the case the present value (PV) for the bond is equal to 889,09€. By multiplying the PV of the bond with the number of bonds, equal to 220.000, the market values of the long term debt is calculated. Multiplying the shares outstanding with the share price of 17,45€ the market values of equity can be calculated. Summing up all the calculated market values, the bottom line is the current market values provided in Table 2. b) Once all the steps described above are done, one can use this information to calculate the weighted average cost of capital (WACC). Table 3 of the appendix shows the different weights for each category. Taking into account the relevant information about the cost of each category, it is easy to multiply them with the weights. Summing up all three pre-tax values, one ends up with a pre-tax WACC of 12,54 percent. Given the information that the marginal tax rate for Virginia May is 40 percent...
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...U.S. v. King Case Study Elise Flanagan BCC 402 Bobby Kemp 14 March 2016 Introduction The purpose of this work is to discuss the relevancy of the court case the United States of America v. Richard D. King, Jr. and the influence it had on future cybercrime cases. A description will be given as to how the Fourth and Fifth Amendments are applied to cybercrimes, as well as an explanation how the Fourth and Fifth Amendments were addressed in this case. Further explanation on how the King ruling may apply to other cases involving computers or other devices that contain electronic evidence is provided. The 4th and 5th Amendments Applied To Cybercrimes The 4th Amendment can be applied to cybercrimes, but not the 5th Amendment. However, the 4th Amendment’s protection in regards to computers, the Internet and cybercrimes can only be applied to data content, not all content. An example of data content is found within remote storage files on computers and private email interactions. When the data is non-content data, i.e. email addresses, there is no assumption of guaranteed coverage and protection ruled under the 4th Amendment. Unlike the 4th Amendment, the 5th Amendment cannot always provide legal protection to an individual. The federal court made such a ruling in 2012, asserting that personal computers lacked the coverage many assumed was in place after the 4th was seen as a viable use for protection of individual rights. Application to This Case The 4th and 5th Amendments were...
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...your lecturer about specific formatting. It is expected that you will attached an assignment cover sheet to each assignment you submit. Page 2 Table of Contents EXECUTIVE SUMMARY 1. INTRODUCTION 2. NATURE OF CONVERTIBLE BONDS 3. FINANCIAL ADVANTAGES AND DISADVANTAGES 3.1 3.2 ADVANTAGES DISADVANTAGES ii 1 1 2 2 2 3 5 5 6 7 4. ACCOUNTING TREATMENT 5. LOGIC OF THE ACCOUNTING REQUIREMENTS 6. CONCLUSION 7. RECOMMENDATIONS REFERENCES (i) Page 3 EXECUTIVE SUMMARY This report provides information about convertible bonds for the managers of Hamilton Manufacturing. Included is information about the nature of convertible bonds, financial advantages and disadvantages Hamilton could expect from issuing such bonds, and their accounting treatment. A convertible bond is a debt security that carries the option of exchange for an equity security, usually common stock. The bond indenture specifies when the bonds may be converted and a conversion price or ratio. The conversion price is usually from 10 to 20 percent above the market price of the common stock at the time of issue. Both the issuer and the investor expect the market price of the stock to rise above the conversion price; therefore, bondholders are likely to convert the bond into equity. Convertible bonds would offer Hamilton three advantages: ▪ The company could issue the bonds at a premium or at a low stated interest rate, which investors would accept because of the conversion privilege. ▪ The company...
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...lower coupon rate ‐ less than it would have to pay on a straight bond Bondholders are not enOtled to vote => voOng control remains in the hands of the common stockholders Bond interest is a deducOble expense for the issuing company Delayed diluOon of common stock and earnings per share (EPS) ‐ ‐ ‐ ‐ ‐ Main components of the deal (1) Exchangeable Bonds QuanOty Face Value Coupon Maturity Bond Exchange Rate Exchange Property 9 000 $10 000 2% p.a. 31.7.2000 1 bond = 598.26 shares 5 384 355 shares of Land & Houses Warrants QuanOty 2 610 000 Exercisable 31.8.1995 – 23.7.1998 Exercise price 422.92 Baht 1 bond = 290 warrants (issued together, dealt separately ager 30 days) Loyalty Warrants 1 bond held 31.7.1995 = 167 warrants Exercise price = last month’s average share price Warrant Exercise Period 31.8.1995 23.7.1998 23.7.2000 31.10.1995 Bond Exchange Period 31.7.1997 31.7.1995 96 Loyalty warrants 98 99 31.7.2000 8 09/11/2011...
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...Case 41, MoGen, Inc. – Finance 675 David Biggs, Amanda McAllaster, Jake Unruh, Andy Rao Background Information MoGen is a leading company in the recently surging biotechnology industry that specializes in human therapeutic drugs that help offset the damaging effects of chemotherapy for cancer patients. The business model for all biotech companies is fairly similar: through extensive R&D, create new medical drugs, obtain FDA approval and product patents and launch them into the market. In order to achieve profitability and increase the likelihood of FDA approval for their various projects, MoGen must ensure a consistent supply of cash to fund R&D efforts and maintain financial flexibility in the face of the high levels of uncertainty that the industry as a whole faces. The biotech industry is truly what one would describe as a high-risk, high-reward venture. Because Mogen and the rest of the industry faces strict and rigorous standards set by the FDA, projects often fail or have extremely long lead-times, making investments riskier and additional compensation a must compared to most other industries. Many research efforts lead to failed projects due to FDA rejection and other projects face the threat of “biosimilars,” which are essentially copies of the drugs, once the product reaches the end of the patent-protection period. At the time, MoGen had several drugs that faced the threat of biosimilar competition in Europe, all due to patent expiration...
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...1) Here, can see that the ROE is mainly driven by the Assets turnover, which keep increasing despite the 2001 crisis. On the other hand, the Operating margins is severely hit by the Internet Bubble with a negative ratio of -19,24% in 2001 and – 44,66% in 2002. This means that €1 of sales generated negative earnings. This is quite understandable with the crisis The leverage ratio on the other hand is increasing until 2001 to reach almost 5 and then become negative in 2002 before going back to its level in 2003. This indicates how much Assets can be used with €1 of Equity and despite the negative number in 2002, the ratio remains quite strong. Then, let’s analyse the leverage effect. The ratio remains is increasing from 1999 where it is almost 50% debt -50% Equity financing to a ratio of 4,24 in 2003 (4 times more debt than Equity!), except in the aftermath of the crisis in 2002 where the ratio was negative due to negative equity. This can be explaining by a strong in-debtment from France Telecom to make up for a decrease in earnings and to finance acquisitions. As a result, France Telecom appears heavily indebt. Regarding the ROCE (Return on Capital Employed), it is lower than the ROE but doesn’t suffer from the crisis: this indicates the ability of France Telecom to make up for the difficult time. Moreover, the ROCE with debt is twice as big as the ROCE without debt in 1999, 2000, 2001, which is a proof on the positive effect of debt. However, it become negative...
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...program which will consist of the subject relevant to search warrants, forth variation, potential cause, reasoning relevant to warrantless queries, etc. This important process is to give 30 authorities the information relevant to the types of queries and warrant searches. A warrant is somewhat of an authorization slip. It grants officers permission to search a particular place or area at a particular time and seize particular items. For example, if investigators from the local division believe you're engaged in trafficking or distributing cannabis out of your place of residency, they may ask a judge or magistrate for a warrant permitting them to search the residency and remove any drugs they find. The 4th Amendment states that queries must be reasonable and specific. A few of the warrant-less queries are approval queries, queries occurrence to arrest, queries during an investigative detention, vehicle queries, management queries, boat queries, boundary queries, and plain view queries.(Criminal Rights, 2008). The authorities can only look in the place described in a warrant and usually can only take the exact assets that are described in the warrant. The authorities cannot search for a home if the warrant identifies the lawn, nor can they search for weaponry if the warrant identifies cannabis vegetation. However, this does not mean that authorities can only take those products detailed in the warrant. If, in the course of their query, law enforcement comes...
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...The “How Kristin Died” case study discusses the inherent problems with organizational design and how it can have tragic implications for innocent victims. The case discusses the murder of Kristin and the difficulties she encountered when dealing with our bureaucratic system. For Kristin the court system failed her and this case outlines how the inefficiencies in the system can have a profound negative impact on other individuals too. Much of this case is related to organizational theory. Organizational theory is about organizational design/structure, the relationship organizations have with their environment and how individuals act within that framework. It is important to public administration because public administration is not exempt to the issues associated with design and structure such as redundancy and hierarchal roadblocks. In addition, public administration has a unique relationship with the environment as it can shape the environment it operates in dramatically. Communication issues within public administration are readily abundant as this case shows. Lastly, understanding of how individuals behave in the framework of public administration can shape how executives, middle managers and street-level bureaucrats act and perform their jobs accordingly. Understanding how organizational theory works and the impact it has on public administration may potentially prevent tragedies like Kristin’s from occurring again. Organizational structure is how an organization is setup...
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...External Commercial Borrowing is a very broad term used for borrowing money from foreign markets, money may be borrowed via bonds,debentures,floating rate notes etc.while Foreign currency convertible bond is a bond issued in foreign currency which acts like a normal bond with regular coupon and principal repayment also gives an option to the investor to convert it into the company,s stock. External Commercial Borrowings (ECBs) include bank loans, suppliers' and buyers' credits, fixed and floating rate bonds (without convertibility) and borrowings from private sector windows of multilateral Financial Institutions such as International Finance Corporation. Euro-issues include Euro-convertible bonds and GDRs. In India, External Commercial Borrowings are being permitted by the Government for providing an additional source of funds toIndian corporates and PSUs for financing expansion of existing capacity and as well as for fresh investment, to augment theresources available domestically. ECBs can be used for any purpose (rupee-related expenditure as well as imports) except for investment in stock market and speculation in real estate. External Commercial Borrowings (ECB) are defined to include commercial bank loans, buyer’s credit, supplier’s credit, securitised instruments such as floating rate notes, fixed rate bonds etc., credit from official export credit agencies, commercial borrowings from the private sector window of multilateral financial institutions...
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...development agencies etc. By the middle of 1991, the process of liberalization of Indian economy was set in motion by the government and now the Indian Corporate is allowed to issue equity or bonds in overseas capital market. The term ‘Euro Issue’ denotes that the issue is made abroad through foreign currency denominated securities and the securities are listed on any overseas stock exchange. The Indian companies get their issues listed on LUXEMBOURG stock exchange. Subscription for such securities can come from any part of world, except India. Companies making Euro Issue can issue depositary receipts, foreign currency convertible bonds or pure debt bonds. Pure debt is not preferred by the investors for two reasons: (i) No Capital appreciation, and (ii) low credit rating of India by various international agencies. Depository receipts and foreign currency convertible bonds are more popular among the investors. Depository receipts are of two types: (i) Global depository receipt and (ii) American depository receipt. 2 Q. No.1 : Write a note on Global Depository receipts. (May 1996, May, 2003, 2008) May 2004 Nov. 2008) Answer A GDR is negotiable certificate that represents...
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...restricts the use of assets. The restrictions placed on assets are one rational for separating both secured and unsecured debt items. b. Guaranteed debt can be defined as debt that has a guarantor or a secondary promise to pay the debt in the event the borrower defaults. Rite Aid’s subsidiaries have provided the guarantee according to note 11 of the 10K report. c. Senior - senior debt describes the debt first repaid in the event of bankruptcy. Senior is simply a term to describe a position of repayment in the event of bankruptcy. Fixed Rate – fixed rate refers to the interest rate on outstanding debt. If debt is fixed the interest rate is set at a predetermined rate and will not change regardless of market conditions. Convertible – the term convertible debt refers to debt that can be converted to equity shares. d. Rite Aid has a vast array of different debt in order to match future cash flows with debt payments. The inherent risk associated with each form of debt is different. As such the varying risk results in a vast array of interest rates. All things equal as risk increases, rates increase. Rite Aid’s large amount of debt also may explain why they hold...
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...ch10 Student: ___________________________________________________________________________ 1. An advantage of issuing a bond relative to stock is that the bond interest payments are tax deductible. True False 2. Issuing bonds dilutes the voting power of the common shareholders because bonds have preferential voting rights. True False 3. The major disadvantages of issuing a bond are the risk of bankruptcy and the negative impact on cash flow because debt must be repaid at a specified date in the future. True False 4. A bond's interest payments are determined by multiplying the bond's principal amount by the stated interest rate. True False 5. A convertible bond can be called for early retirement at the option of the issuing company. True False 6. The issuing company and the bond underwriter determine the selling price of a bond. True False 7. The issuance price of a bond is the present value of both the principal plus the cash interest to be received over the life of the bond discounted by the stated (coupon) rate. True False 8. When the market rate of interest is greater than the stated interest rate, the bond will sell at a discount. True False 9. A bond will sell for a premium when the market rate of interest is greater than the stated rate of interest. True False 10. The proceeds received from a bond issue will be greater than the bond maturity value when the stated interest rate exceeds the market rate of interest. True...
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