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1. Assume that Reynolds tax rate is 40 percent and the equipments depreciation would be $100 per year.

If the company leased the asset on a 2year lease, the payment would be $110 at the beginning, the bank would charge 10 percent interest on the loan. Should Reynolds lease or buy the equipment? 2. Gregg company recently issued two types of bonds. The first issue consisted of 20-year straight debt with an 8 percent annual coupon. The second issue consisted of 20-year bonds with a 6 percent annual coupon and attached warrants. Both issues sold at their $1,000 par values. What is the implied value of the warrants attached to each bond? 3. Peterson Securities recently issued convertible bonds with a $1,000 par value. The bonds have a conversion prive of $40 a share. What is the convertible issues conversion ratio?