Oracle stock is selling for $68 per share and has an expected dividend in the coming year of $4.1, and has an expected constant growth rate of 6%. The company is considering issuing a 15-year convertible bond that would be priced at its $1,000 par value. The bonds would have an 8% annual coupon, and each bond could be converted into 25 shares of common stock. The required rate of return on an otherwise similar nonconvertible bond is 10%.

What is the straight bonds fair price? *

a. $983.20

b. $976.23

c. $847.87

d. $836.98

e. None of the above