Craig's Cake Company has an outstanding issue of

20-year

convertible bonds with a

$1,000

par value. These bonds are convertible into

75

shares of common stock. They have a

13%

annual coupon interest rate, whereas the interest rate on straight bonds of similar risk is

16%.

a.Calculate the straight bond value of this bond.

b. Calculate the conversion (or stock) value of the bond when the market price is

$20

per share of common stock.

c.What is the minimum market value of the bond?

Question content area bottom

Part 1

a. The straight value of the bond is

$enter your response here.

(Round to the nearest cent.)