The LeMonde Corporation has debentures outstanding (par value = $1,000) that are convertible into the companys common stock at a price of $40 per share. The convertibles have a coupon interest rate of 8.5 percent and mature 16 years from now. In addition, the convertible debenture is callable at 106 percent of par value. The company has a marginal tax rate of 40 percent.

• Calculate the conversion value if LeMondes common stock is selling at $40 a share. Round your answer to the nearest dollar. $
• Calculate the bond value, assuming that straight debt of equivalent risk and maturity is yielding 10 percent. Round your answer to the nearest dollar. $
• Using the answers from parts a and b, what is a realistic estimate of the market value of the convertible debentures?

• .What is the conversion value if the companys common stock price increases to $50 a share? Round your answer to the nearest dollar.

• Given the situation presented in Part d, 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?

• What is the minimum common stock price that will allow LeMonde management to use the call feature of the debentures to effectively force conversion? Round your answer to the nearest cent.