Florence Inc. issued 8,000, 5-year convertible bonds of $2,000 each for $4,000,000 at the beginning of 2021. The bonds have a stated rate of interest of 9% and interest is payable annually. Each bond can be convertible into 100 shares with a par value of $10. The market rate of similar nonconvertible debt is 10%. The fair value of the liability component using the with-and-without method is

a. $3,848,288 b. $2,483,600 c. $1,365,688 d. $151,712