Florida Enterprises is considering issuing a $10-$year convertible bond that will be priced at its $$1,000$ par value. The bonds have an $8$ percent annual coupon rate, and each bond can be converted into $25$ shares of common stock. The stock currently sells at $$30$ a share, has an expected dividend in the coming year of $$3,$ and has an expected constant growth rate of $5\mathrm{.}0$ percent. Assume that the required rate of return on a similar straight$-$debt issue is $10\mathrm{.}0$ percent?

$1-$ What is the estimated floor price of the convertible at the end of Year $3$ if the required rate of return on a similar straight$-$debt issue is $10\mathrm{.}0$ percent?

$($a$)$ $$868\mathrm{.}22($b$)$ $$878\mathrm{.}29($c$)$ $$889\mathrm{.}34($d$)$ $$902\mathrm{.}63($e$)$ $$956\mathrm{.}24$

$2-$ If the firm intends to force conversion on the first anniversary date after CV $>$$$1,100,$ when is the issue expected to be called?

$($a$)4$ years $($b$)5$ years $($c$)6$ years $($d$)7$ years $($e$)8$ years

$3-$ What is the convertible$$s before$-$tax expected cost of capital to the firm?

$($a$)8\mathrm{.}50\%($b$)8\mathrm{.}67\%($c$)8\mathrm{.}98\%($d$)9\mathrm{.}24\%($e$)9\mathrm{.}65\%$