Matthews Technology has a $1,000 par value, 20 year convertible bond outstanding with a 10% coupon rate that can be converted into 25 shares of common stock. The common stock is currently selling for $34.00 a share. The convertible bond is selling for $30 more than the conversion value. A competitive, 20 year nonconvertible bond of the same risk class has a 12% annual coupon rate.

a) What is the number of common shares to which the convertible bond can be converted to (Conversion ratio)? Round to the nearest share.

b) Compute the conversion price? Round to 2 decimal places.

c) Compute the conversion value? Round to 2 decimal places.

d) Compute the conversion premium? Round to 2 decimal places.

e) Compute the current selling price of the convertible bond? Round to 2 decimal places.

f) Compute the pure bond value? Round to 2 decimal places.

g) If the common share price goes down to $31.50 and the conversion premium goes up to $44, what will be the new yield to maturity on the bonds? Round to 2 decimal places.