Vernon Glass Company has $20 million in 10 percent, $1,000 par value convertible bonds outstanding. The conversion ratio is 60, the stock price is $16, and the bond matures in 20 years. The bonds are currently selling at a conversion premium of $40 over their conversion value.

If the price of the common stock rises to $22 on this date next year, what would your rate of return be if you bought a convertible bond today and sold it in one year? Assume on this date next year, the conversion premium has shrunk from $40 to $15.