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Ritzy Ltd. issued $3,000,000, four-year, 4% convertible bonds at par. Bonds pay interest annually. Each $1,000 bond is convertible into 100 of Ritzy's common shares,
Ritzy Ltd. issued $3,000,000, four-year, 4% convertible bonds at par. Bonds pay interest annually. Each $1,000 bond is convertible into 100 of Ritzy's common shares, which are currently trading at $25. The current market rate for similar non-convertible bonds is 6%. Assuming Ritzy follows IFRS, the value to be recorded for the conversion option upon issuance of the bonds is:
Question 3 options:
$207,906
$120,000
$111,684
$162,526
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