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Suppose That Healdsburg Renegotiates the 8% Notes on December 31

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Essay

Suppose that Healdsburg renegotiates the 8% notes on December 31, 2014 when the going interest rate is 8%. Healdsburg agrees to make 12 equal annual installments, commencing on December 31, 2015, rather than pay the $225 million in a lump sum at maturity. What would the annual payments be?


Definitions:

Market Value

The existing cost for purchasing or selling an asset or service in the public marketplace.

Stock Price

The monetary value of a share of a company's stock traded on a stock exchange.

Reverse Stock Splits

A corporate action in which a company reduces the total number of its outstanding shares to increase the share price without altering the company's market capitalization.

Shares Outstanding

The total number of shares of stock that are currently owned by shareholders, including those held by institutional investors and restricted shares.

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