medium · Investment Banking
A company has a $300 million convertible bond with a conversion price of $30.00. The current share price is $40.00.
When calculating Enterprise Value using the if-converted method, how is this bond treated?
- The $300 million remains classified in Total Debt on the balance sheet, and no additional shares are added to the count.
- The bond is ignored entirely in the EV build because conversion hasn't formally occurred yet.
- Both the $300 million debt and the 10 million converted shares are included at the same time.
- The $300 million is excluded from Total Debt, and 10 million shares are added to the diluted share count.
Sign up free to see the explanation and track your rank →
More Investment Banking practice
- What is the Multiple on Invested Capital (MOIC)?
- What is the control premium?
- Which valuation methodology would likely produce the 'floor' valuation for a mature indust
- Which of the following changes, held in isolation, would most likely achieve this?
- What is the Multiple on Invested Capital (MOIC)?
- If a company has an Unlevered Free Cash Flow (UFCF) of $500 million in Year 5, a WACC of 1
- What is the 3-year Compound Annual Growth Rate (CAGR)?
- If a company's Net Debt is negative, what is the relationship between its Equity Value and