1. Your company is considering the issuance of some 25 year bonds. If the company issued straight debt the required rd is 10.58, however the company will be a little strapped for cash in the short term before its investment opportunities really start to pay off. Therefore it would prefer to pay a lower rate by issuing convertible bonds. Par Value: $1000 Coupon rate: 10% annual coupon Term: 25 years Conversion ratio: 27 shares Call Price: $1100 Po - $32; g = 100; a) If this convertible bond sells for $1000, then how much is the straight bond value. [8 points) b) Calculate what rate of return the investor would get if the bond were converted after 12 years. [4 points)