Cheung Zap Inc. just issued 13-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 $51.84. Cheung's convertible bonds pay a 6.48% annual coupon, but if Cheung had issued straight-debt bonds (no conversion), it would have had to pay 10.80% annual interest. Based on the information available, complete the following table. Value Conversion ratio of Cheung's bond issue 19.29 per bond Straight-debt value of this convertible debt issue $463.62 per bond Value of the convertible option $294.55 per bond Cheung's common stock currently sells for $32 per share. Would an investor want to convert the bonds now? No Yes Suppose analysts expect Cheung to pay a dividend of $4.00 per share at the end of the year and for the dividend to grow at a constant rate of 2.5% per year. What is the expected conversion value five years from now? $698.49 per share $523.87 per share $1,877.13 per share $1,047.74 per share