An analyst is building a DCF for Fusion motors, a publicly traded Electric car manufacturer, with 120 million shares of

common stock outstanding and trading at $85 per share. Using the Unlevered approach, the analysts calculates enterprise

value of $3 billion and net debt of $800 million ($1billion in gross debt, less $200 million in cash). After Checking her work, realizes

that she did not reflect the following information in her calculations:

There is a $100 million convertible bond on the balance sheet

The bond has a 2.0% coupon and is convertible into 2 million shares of common stock at the option of the holder

Question: which of the following is the most appropriate needed to reflect the convertible bonds details

above? To answer the question, treat out of money convertible debt as straight debt as straight debt with no equity component

and in money convertible debt as straight equity with no debt component. You do not need conduct a dilution test.