Doverdale plc has some convertible loan stock, with a current market value of £109 per £100 nominal value, on which it will pay interest at the rate of 12 per cent on their nominal value in one year’s time and then annually until conversion. In four years’ time the loan stock can be converted into ordinary shares at the rate of 25 shares per £100 nominal value of loan stock.

The cost of the loan stock is 15 per cent p.a.

What value does the market believe that the shares will have in four years’ time, if it is assumed that conversion will take place at that time? (Ignore taxation throughout.)