Given the following information concerning a convertible bond: Coupon: 5 percent ($50 per $1,000 bond) Exercise price: $24 Maturity date: 25 years Call price: $1,040 Price of the common stock: $28 a. If this bond were nonconvertible, what would be its approximate value if comparable interest rates were 7 percent? Assume that the bond pays interest annually. Use Appendix B and Appendix D to answer the question. Round your answer to the nearest dollar. $ b. How many shares can the bond be converted into? Round down your answer to the nearest whole number. shares c. What is the value of the bond in terms of stock? Use the number of shares into which the bond may be converted into from part a. Round your answer to the nearest dollar. S d. What is the current minimum price that the bond will command? Round your answer to the nearest dollar. e. Is there any reason to anticipate that the firm will call the bond? The price the stock -Select- the bond's exercise price. So the firm -Select- v force conversion calling the bon f. What do investors receive if they do not convert the bond when it is called? Round your answer to the nearest dollar. 9. If the bond were called, would it be advantageous to convert? It -Select- advantageous to convert since the bond's value as stock is -Select- the call price. Interest Factors for the Present Value of One Dollar wear 12% .893 .797 18% 847 2% 1980 961 942 974 oc 24% 806 650 1% 990 980 971 oc OCT .951 39 971 942 015 Oon och 863 49 5% 962 957 925 907 000 864 856822 701 822 784 6% 94 890 840 792 717 147 7% 935 873 816 200 712 713 8% 920 857 70 725 con 681 99 917 842 772 708 CEO 650 10% 90g 820 761 683 621 621 20% 832 694 570 182 102 402 28% 781 610 477 272 201 4 122 .636 567 va 705 335 279 -24 178 . 513 888 . 190 170 871 .813 .760 711 1023 789 42 .837 .766 .703 .64 .820 744 676 614 009 .623 302 544 508 cad 639 299 .583 547 540 304 500 460 463 422 .627 224 558 0 424 386 .507 452 409 361 322 .456 400 351 .308 .270 .275 .222 .179 .144 116 22 .226.194 . 102 .247 429 135 6 - 650 505 527 557 497 530 469 .758 .661.577 505 442 743 642 555 481 .417 .388 350 287 356 319.257 .290 229 .237 .208 .182 .160 140 .215 187 .163 .141 195 168 145 125 108 084 623 534 458 394 .605 513 436 371 317 270 231 198 587 494 416 350 .296 .250 212 570 475 396 331 276 232 194 .164 554 456 377 312 258 .215 .178 149 021 037 014 375 295 23 184 .146 116 .092 .308 231 .174 .131 099 075 057 Given the following information concerning a convertible bond: Coupon: 5 percent ($50 per $1,000 bond) Exercise price: $24 Maturity date: 25 years Call price: $1,040 Price of the common stock: $28 a. If this bond were nonconvertible, what would be its approximate value if comparable interest rates were 7 percent? Assume that the bond pays interest annually. Use Appendix B and Appendix D to answer the question. Round your answer to the nearest dollar. $ b. How many shares can the bond be converted into? Round down your answer to the nearest whole number. shares c. What is the value of the bond in terms of stock? Use the number of shares into which the bond may be converted into from part a. Round your answer to the nearest dollar. S d. What is the current minimum price that the bond will command? Round your answer to the nearest dollar. e. Is there any reason to anticipate that the firm will call the bond? The price the stock -Select- the bond's exercise price. So the firm -Select- v force conversion calling the bon f. What do investors receive if they do not convert the bond when it is called? Round your answer to the nearest dollar. 9. If the bond were called, would it be advantageous to convert? It -Select- advantageous to convert since the bond's value as stock is -Select- the call price. Interest Factors for the Present Value of One Dollar wear 12% .893 .797 18% 847 2% 1980 961 942 974 oc 24% 806 650 1% 990 980 971 oc OCT .951 39 971 942 015 Oon och 863 49 5% 962 957 925 907 000 864 856822 701 822 784 6% 94 890 840 792 717 147 7% 935 873 816 200 712 713 8% 920 857 70 725 con 681 99 917 842 772 708 CEO 650 10% 90g 820 761 683 621 621 20% 832 694 570 182 102 402 28% 781 610 477 272 201 4 122 .636 567 va 705 335 279 -24 178 . 513 888 . 190 170 871 .813 .760 711 1023 789 42 .837 .766 .703 .64 .820 744 676 614 009 .623 302 544 508 cad 639 299 .583 547 540 304 500 460 463 422 .627 224 558 0 424 386 .507 452 409 361 322 .456 400 351 .308 .270 .275 .222 .179 .144 116 22 .226.194 . 102 .247 429 135 6 - 650 505 527 557 497 530 469 .758 .661.577 505 442 743 642 555 481 .417 .388 350 287 356 319.257 .290 229 .237 .208 .182 .160 140 .215 187 .163 .141 195 168 145 125 108 084 623 534 458 394 .605 513 436 371 317 270 231 198 587 494 416 350 .296 .250 212 570 475 396 331 276 232 194 .164 554 456 377 312 258 .215 .178 149 021 037 014 375 295 23 184 .146 116 .092 .308 231 .174 .131 099 075 057