Convertible Bonds with an Observable Price: A company issues $1 million of $1,000 face value convert- ible bonds with a 6% annual coupon payment. The bonds mature in 5 years. Each bond is convertible into 200 shares of the company's stock at the end of the 5 years. If the company had straight debt outstanding, it would have a yield to maturity and a cost of capital of 9%. The bonds were issued today at $1,200. The company has 1 million shares of stock outstanding, and its stock is trading at $4.50 per share. Its common equity cost of capital is 15%, the standard deviation of its annual stock return is 60%, its continuously compounded dividend yield is 4.75%, and the risk-free rate is 3.25%. This is the only financing the company uses to finance the company. Calculate the value of the conversion feature of these bonds on a per convertible share value and calculate the cost of capital for this conversion feature and for the convertible bond. The income tax rate is 40%.