Your client holds 8% bonds in a company which have a face value of $100 and 10 years to maturity. The bonds pay a coupon every six months. The yield on bonds of companies with similar risk is currently 1% above the Australian 10-year government bond rate of 5.5% p.a. Your client is offered the option of converting each bond she holds into shares which are expected to pay a dividend of $1.307 per share in the next half-year, and these are expected to grow at approximately 2.5% every half-year. If shares in businesses of similar risk are currently trading at a discount rate of 9% p.a. nominal, your client would like to know whether she should accept the option?