Cheung Zap Inc. just issued $19-$year convertible bonds at a par value of $$1,000.$ At any time before maturity, investors have the option to exchange their bonds for shares of Cheung's common stock at a conversion price of $$48\mathrm{.}96.$

Cheung's convertible bonds pay a $6\mathrm{.}12\%$ annual coupon, but if Cheung had issued straight$-$debt bonds $($no conversion$),$ it would have had to pay $10\mathrm{.}20\%$ annual interest.

Based on the information available, complete the following table.

Value

Conversion ratio of Cheung's bond issue

Straight$-$debt value of this convertible debt issue

Value of the convertible option

Cheung's common stock currently sells for $$26$ per share. Would an investor want to convert the bonds now?

Yes

No

Suppose analysts expect Cheung to pay a dividend of $$4\mathrm{.}00$ per share at the end of the year and for the dividend to grow at a constant rate of $5\%$ per year. What is the expected conversion value five years from now?

$$1,624\mathrm{.}49$ per share

$$1,016\mathrm{.}31$ per share

$$677\mathrm{.}54$ per share

$$508\mathrm{.}16$ per share