Toronto Skaters currently has $1,000,000 of 8% convertible debt outstanding.The coupon interest is paid on an annual basis.The $1,000 face value debentures mature in 12 years and have a conversion price of $50.Similar straight debt currently yields 7%.The firm's common stock is currently trading for $55 per share.What is the current straight debt value and the current conversion value of the convertibles? What is the floor price for the convertibles? If all the convertible holders decided to convert, how many additional shares would have to be issued?
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