On January 1, 20x1, OCCIDENTAL WESTERN Co. issued 12%, 3-year, P4,000,000 convertible bonds at 110. Each $4,000 bond is convertible into 8 shares with par value per share of P400. Principal is due on December 31, 20x3 but interests are due annually at each year-end. When the bonds were issued, they were selling at a yield to maturity market rate of 10% without the conversion option. On December 31, 20x2, half of the bonds were converted into equity. Conversion costs incurred amounted to P80,000. How much is the net increase in equity as a result of the conversion?

a. 1,687,375

b. 1,956,364

c. 2,043,132

d. 1,897,096