NBC software Co has $10 million (face value) of convertibles bonds outstanding at the end of 2012. The features of each bond together with the current stock price are shown on the table below:

Bond face value $1000

Conversion Price $20

Current call price 110 (percent of face value)

Current trading price 125 (percent of face value)

Maturity 2020

Current share price of NBC software Co$30 (per share)

Annual coupon rate (interest rate) 10%

a) Calculate the bonds conversion value.

b) why can a bond sell above the conversion value

c) Discuss the relative merits of discounted cash flows methods (DCF)over non DCF methods.