n the following information concerning a convertible bond: - Coupon: 7 percent ($70 per $1,000 bond) - Exercise price: $22 - Maturity date: 20 years - Call price: $1,030 - Price of the common stock: $27 a. If this bond were nonconvertible, what would be its approximate value if comparable interest rates were 9 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. 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 of the stock is -Select- the bond's exercise price. So the firm Select force conversion by calling the bond. f. What do Investors receive if they do not convert the bond when it is called? Round your answer to the nearest dollar. $ g. 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 2% 3% 7% 8% 10% 18% Time Period le... year) 1 2 3 4. 5 20% .833 990 980 971 961 951 980 961 942 1924 906 971 943 915 .889 863 5% 952 907 864 823 784 962 925 889 .855 822 6% 1943 890 840 792 1747 935 873 816 763 713 694 9% 917 842 772 708 650 .926 1857 794 1735 .681 12% 893 .797 712 636 .567 909 826 751 .683 .621 14% .877 769 675 592 519 15% .870 756 658 1572 497 16% 862 743 641 552 1476 .847 .718 609 .516 437 24% .806 650 524 423 341 28% 1.781 610 477 373 .291 579 482 402 UAWN OVO 6 8 942 933 923 914 905 888 871 .853 .837 820 838 813 789 1766 .744 1790 1760 1731 703 676 746 .711 .677 1645 .614 1705 1665 627 592 558 666 .623 582 544 508 630 583 540 500 463 596 547 502 460 422 564 513 467 1424 1386 507 452 404 361 322 456 400 351 308 270 432 376 1327 284 247 410 354 305 263 227 370 314 266 226 191 335 279 .233 .194 162 275 222 179 144 .116 227 178 139 .108 085 10 11 12 13 14 15 .896 887 879 870 861 .804 788 773 1.758 743 722 .701 681 1661 .642 .650 625 1601 .577 555 585 1557 .530 505 481 1527 497 469 442 417 475 444 415 388 362 429 397 .368 340 1315 388 356 326 299 275 1350 1319 1290 263 1239 287 257 229 205 .183 237 1208 -182 .160 1140 1215 187 163 141 123 195 .168 145 125 108 . 162 .137 116 099 084 135 .112 093 078 2065 094 076 061 049 040 .066 052 040 032 .025 16 17 18 19 20 .853 844 -836 828 820 728 -714 .700 .686 673 .623 .605 587 570 554 534 513 494 475 456 458 436 416 396 377 .394 371 350 331 312 339 317 296 .276 258 3292 270 250 .232 215 252 .231 212 194 178 218 198 180 -164 .149 1163 .146 130 116 104 $123 108 095 083 073 107 _093 081 070 061 093 080 069 060 051 071 060 051 043 037 054 045 038 031 026 032 026 021 017 014 2019 015 2012 2009 2007 25 .780 .610 478 375 295 233 .184 1146 116 092 1059 1038 030 024 2016 010 2005 2002 30 .742 .552 412 1308 .231 174 1131 1099 075 2057 033 2020 2015 012 007 004 002 001 Interest Factors for the Present Value of an Annuity of One Dollar pole 3% Time Period leg 59 6% 7% 8% 10% 12% 16% 18% 20% 24% 28% 32% 36% 0.990 0.980 0.971 0.962 0.952 0.943 0.935 0.926 0.917 0.909 0.893 0.877 0.862 0.847 0.833 0.806 0.781 0.758 0.735 1.970 1.942 1913 1.886 1.859 1.833 1.808 1.783 1.759 1.736 1.690 1.647 1.605 1.566 1.528 1.457 1392 1332 1.276 3 2.941 2.884 2.829 2.775 2.723 2.673 2.624 2.577 2.531 2.487 2.402 2.322 2.246 2.174 2.106 1.981 1.868 1.766 1674 4 3.902 3.808 3.717 3.630 3.546 3.465 3.38733123.240 3.170 3.037 2.914 2.798 2.690 2.589 2.404 2.241 2.096 1966 5 4.853 4.713 4.580 4.452 4.329 4.212 4.100 3.993 3.890 3.791 3.605 3.433 3.274 3.127 2.991 2.745 2.532 2.345 2.181 WN- 6 7 8 9 10 5.795 5.601 5.417 5.242 5.076 4.917 4.766 4.623 4.486 4.355 4.111 3.889 3.685 3.498 3.326 3.020 2.759 2.534 2.399 6.728 6.472 6.230 6.002 5.786 5.582 5.389 5.206 5.033 4.868 4.564 4.288 4.039 3.812 3.605 3.242 2.9372.678 2.455 7.652 7325 7020 6.733 6.463 6.210 5.971 5.747_-5.535 5.335 4.968 4.639 4.344 4.078 3.837 3.421 3.076 2.786 2.540 8.566 8.162 7786 7.435 7.108 6.802 6.515 6.247 5.985 5.759 5.328 4.946 4.607 4.303 4.031 3.566 3.184 2.868 2603 9.4718.983 8.530 8.111 7.722 7360 7.024 6.710 6.418 6.145 5.650 5.216 4.833 4.494 4.193 3.682 3.269 2.930 2.650 11 12 10 10.368 9.787 9.253 8.760 8.306 7.887 7.499 7.139 6.805 6.495 5.988 5.453 5.029 4.656 4.327 3.776 3.335 2978 2.683 11.255 10.575 9.954 9385 8.863 8.384 7.943 7.536 7.161 6.814 6.194 5.660 5.197 4.793 4.439 3.851 3.387 3.013 2.708 12134 11348 10.635 9.986 9.394 8.534 8.358 7.904 7.487 7.103 6.424 5.842 5.342 4910 4.533 3.912 3.427 3.040 2.727 B.004 12.106 11.296 10.563 9.899 9.295 8.745 8.244 7.786 7.367 6.628 6.002 5.468 5.008 4.611 3.962 3.459 3.061 2.740 3.865 12.849 11.938 11.118 10.380 9.712 9.108 8.559 8.060 7.606 6.811 6.142 5.575 5.092 4.675 4.001 3.483 3.076 2.750 14 15 16 14.718 13.578 12.561 11.652 10.838 10.106 9.447 8.851 8.312 7.824 6.974 6.265 5.669 5.162 4.730 4.003 3.503 3.088 2.758 15562 14.292 13.166 12.166 11.274 10.477 9.763 9.122 8.544 8.002 7.120 6.373 5.749 5.222 4.775 4.059 3.518 3.097 2.763 16,398 14.992 13.754 12.659 11.690 10.828 10.0599.372 8.756 8.201 7.250 6.467 5.818 5.273 4.812 4.080 3.5293.104 2767 17226 15.678 14.324 13.134 12.085 11.158 10.336 9.604 8.950 8.365 7.366 6.550 5.877 5.316 4.844 4.097 3.539 3.109 2.770 18.046 16-351 14.877 13.590 12.462 11.470 10.594 9.818 9.128 8.514 7.469 6.623 5.929 5.353 4.870 4.110 3.546 3.113 2772 19 20 25 22.023 19.523 17.413 15.622 14.094 12.783 11.654 10.675 9.8239.077 7.843 6.873 6.097 5.467 4.948 4.147 3.564 3.122 2.776 30 25.808 22.937 19.600 17.292 15.373 13.765 12.409 11.258 10.274 9.427 003 6.177 1979 4.160 3.569_3.124 2.778