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QUESTION 1 A company has issued 8% convertible loan notes which are due to be redeemed in five years' time. Theyare currently quoted at $82

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QUESTION 1 A company has issued 8% convertible loan notes which are due to be redeemed in five years' time. Theyare currently quoted at $82 per $100 nominal. The loan notes can be converted into 25 shares in fiveyears' time. The share price is currently $3.50 and is expected to grow at a rate of 3% p.a. Assume a 30% rate of tax. Calculate the cost of the convertible debt

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