Herring Inc.is considering issuing 18-year,9.0% semiannual coupon,$1,000 face value convertible bonds at a price of $1,000 each.Each bond would be convertible into 25 shares of common stock.If the bonds were not convertible,investors would require an annual nominal yield of 11.8%.What is the straight-debt value of each bond at the time of issue? Do not round your intermediate calculations.
A) $911.77
B) $713.56
C) $753.20
D) $792.84
E) $951.41
Correct Answer:
Verified
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