d. As an alternative to the bond with warrants, Mr. Duncan is considering convertible bonds. The firm’s investment bankers estimate that EduSoft could sell a 20-year, 8.5% coupon (paid annually), callable convertible bond for its $1,000 par value, whereas a straight-debt issue would require a 10% coupon (paid annually).pg.12 The convertibles would be call protected for 5 years, the call price would be $1,100, and the company would probably call the bonds as soon as possible after their conversion value exceeds $1,200. Note, though, that the call must occur on an issue-date anniversary. EduSoft’s current stock price is $20, its last dividend was $1, and the dividend is expected to grow at a constant 8% rate.pg.12 The convertible could be converted into 40 shares of EduSoft stock at the owner’s option.