Accounting | Valuation of Financial Claims | University of Kansas


A company is in need of $30 million in new capital financing to be used to expand the consumer market of the company. The CEO asks you to provide a comparison of three different options: a traditional debt issue, a convertible debt issue, and a debt issue with detachable warrants. Using the excel file provided (link below), evaluate each of the three options. In your paper, compare and contrast elements of each debt issue that you deem relevant to the financing decision. Items that are relevant to the financing decision can include, but not limited to, financial ratios, balance sheet effects, and/or income statement effects (i.e., return on equity, leverage, earnings, cash flows, earnings per share, diluted earnings per share, etc.). Using supporting arguments and a supporting data visualization make the case for one of the three financing options (there is not a right or wrong answer but your arguments need to be supported accurately). 

Details for each potential debt issue are contained in the above excel file and are summarized below: 

Option 1 – Traditional Debt Issue – Issue $30 million in bonds with a stated rate of 2.5% due in 10 years. Interest is paid semi-annually, the debt is expected to issue at face value, and the underwriter will charge $200,000 to take the issue to market. 

Option 2 – Convertible Bond Issue – Issue $28 million in convertible bonds with a stated rate of 2.5% and conversion price of $200. Interest is paid semi-annually, the issue price is expected to be $30 million, and the underwriter will charge $250,000 to take the issue to market. 

Option 3 – Lump sum sale of bonds with detachable warrants – Issue $28 million in $1,000 2.5% bonds each with a detachable warrant. The exercise price for each warrant is $14. Interest is paid semi-annually, the bonds would issue at face value without the detachable warrants, and the underwriter will charge $300,000 to take the issue to market. 

Excel files with 3 sheets is attached to be used for comparaison.  

Additional Information: The firm is a non-dividend paying firm (i.e., neither common nor preferred stockholders are paid a dividend). There are 2 million shares of common stock outstanding, this balance of outstanding common stock is expected to remain consistent over the 10-year period. Earnings before interest and taxes is expected to $12 million dollars in the first year with a 5% increase year over year. The stock price is $11 per share in the first year and is expected to increase 4% year over year. The tax rate is 21%. 

  • 2 pages max, double spaced with 1 inch margin 
  • Data visualization such as graph, chart, etc. are welcome. 

Thank you in advance. 

Paper Writing Center
Calculate your paper price
Pages (550 words)
Approximate price: -

Why Work with Us

Top Quality and Well-Researched Papers

We always make sure that writers follow all your instructions precisely. You can choose your academic level: high school, college/university or professional, and we will assign a writer who has a respective degree.

Professional and Experienced Academic Writers

We have a team of professional writers with experience in academic and business writing. Many are native speakers and able to perform any task for which you need help.

Free Unlimited Revisions

If you think we missed something, send your order for a free revision. You have 10 days to submit the order for review after you have received the final document. You can do this yourself after logging into your personal account or by contacting our support.

Prompt Delivery and 100% Money-Back-Guarantee

All papers are always delivered on time. In case we need more time to master your paper, we may contact you regarding the deadline extension. In case you cannot provide us with more time, a 100% refund is guaranteed.

Original & Confidential

We use several writing tools checks to ensure that all documents you receive are free from plagiarism. Our editors carefully review all quotations in the text. We also promise maximum confidentiality in all of our services.

24/7 Customer Support

Our support agents are available 24 hours a day 7 days a week and committed to providing you with the best customer experience. Get in touch whenever you need any assistance.

Try it now!

Calculate the price of your order

Total price:

How it works?

Follow these simple steps to get your paper done

Place your order

Fill in the order form and provide all details of your assignment.

Proceed with the payment

Choose the payment system that suits you most.

Receive the final file

Once your paper is ready, we will email it to you.

Our Services

No need to work on your paper at night. Sleep tight, we will cover your back. We offer all kinds of writing services.


Essay Writing Service

No matter what kind of academic paper you need and how urgent you need it, you are welcome to choose your academic level and the type of your paper at an affordable price. We take care of all your paper needs and give a 24/7 customer care support system.


Admission Essays & Business Writing Help

An admission essay is an essay or other written statement by a candidate, often a potential student enrolling in a college, university, or graduate school. You can be rest assurred that through our service we will write the best admission essay for you.


Editing Support

Our academic writers and editors make the necessary changes to your paper so that it is polished. We also format your document by correctly quoting the sources and creating reference lists in the formats APA, Harvard, MLA, Chicago / Turabian.


Revision Support

If you think your paper could be improved, you can request a review. In this case, your paper will be checked by the writer or assigned to an editor. You can use this option as many times as you see fit. This is free because we want you to be completely satisfied with the service offered.