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IBM has $1,000 face value semi-annual bonds outstanding with 5 years left to maturity. They pay an annual rate of 5% and the current yield

IBM has $1,000 face value semi-annual bonds outstanding with 5 years left to maturity. They pay an annual rate of 5% and the current yield to maturity is 3.5%. The bonds are convertible into 8 shares of IBM at any time. What is the market price of the bond if the common shares of IBM are trading at $150 per share?

The correct answer is $1,200. Can you show me the steps please and use equations and no excel or financial calculator.

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