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Determine the conversion value of the following debenture: -$1,000 par value -Convertible to company stock at a price of $25/share (stock is currently trading at
Determine the conversion value of the following debenture:
-$1,000 par value
-Convertible to company stock at a price of $25/share (stock is currently trading at $22/share in the market)
-8% coupon rate
-Mature in twelve years
-Callable at 110% of par value
-Straight debt of equivalent risk and maturity is yielding 12%
-40% tax bracket
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