Exhibit 14-9
USE THE FOLLOWING INFORMATION FOR THE NEXT PROBLEM(S)
BioTech Industries has debentures outstanding (par value $1,000) convertible into the company's common stock at $30. The coupon rate is 11% payable semiannually and they mature in 10 years.
-Refer to Exhibit 14-9. Calculate the conversion value of the bond if the stock price is $27.00 per share.
A) $600.00
B) $700.00
C) $800.00
D) $900.00
E) $1,000.00

Question

Quizplus · Accepted Answer

The bond is convertible into 33.333 shares of common stock since $1000.00/$30.00 = 33.333 shares.
The conversion value is 33.333 ´ $27.00 = $900.00

Exhibit 14-9 USE THE FOLLOWING INFORMATION FOR THE NEXT PROBLEM(S)