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    Mogen_CS_-_Questions

    Uploaded by

    Inês Fernández
    Corporate Finance

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd

    Mogen_CS_-_Questions

    Uploaded by

    Inês Fernández
    2 views1 page
    Corporate Finance

    Copyright

    © © All Rights Reserved

    Available Formats

    PDF, TXT or read online from Scribd

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    Corporate Finance

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    2 views1 page

    Mogen_CS_-_Questions

    Uploaded by

    Inês Fernández
    Corporate Finance

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
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    Mogen, Inc.

    (Darden Business Publishing: UVA-F-1559)

    Questions

    1. How important is it for MoGen to get $5 billion of external funding in 2006? Could
    the company cut back on its share repurchase program, for example, to reduce the
    funds needed?

    2. What are the pros and cons of issuing convertible debt via straight debt or equity?

    3. Use the Black-Scholes model to estimate the value of the conversion option with a
    25% conversion premium for one share of MoGen stock? Be prepared to explain your
    choice for the stock price, exercise price, risk-free rate, time to maturity and volatility.
    Note: For simplicity you should assume dividend-yield is zero

    4. What coupon rate should Manaavi propose in order for the convert to sell at exactly
    $1,000 per bond? What discount rate did you use to value the straight bond
    component? What would happen to the coupon rate if Manaavi were to propose a
    15% and a 40% conversion premium?

    Notes:
    1. Be aware there isn’t a “correct answer” to the case. You will have to make some
    assumptions that should be clearly justified to improve your final mark.
    2. Your case solution (Excel file called “Mogen CS - Template”. Please add your name
    to the file name) should be sent by e-mail until 4.30 pm of November 20
    ([email protected]).
    3. I am available to help you regarding any doubt you will have during your work.
    Good work!

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