The Findlay Company has debentures outstanding (par value = $1,000) that are convertible into common stock at a price of $25 per share. The convertible bonds have a coupon interest rate of 9 percent and mature in 16 years. The convertible bonds are callable at 106 percent of par value. The company has a marginal tax rate of 40 percent.

• Calculate the conversion value if Findlays common stock is selling at $15 a share. Round your answer to the nearest dollar. $
• Calculate the straight bond value, assuming that straight debt of equivalent risk and maturity is yielding 13 percent. Round your answer to the nearest dollar. $
• Determine the conversion premium if the market value of the bonds is $850. Round your answer to the nearest dollar.
• What is the conversion value if the companys common stock price increases to $30 a share? Round your answer to the nearest dollar.

• Given the situation presented in the part directly above, what is a realistic estimate of the market value of the convertible debenture? Using the answers from parts a and b, what is a realistic estimate of the market value of the convertible debentures? a or b from above?