Cannon Manufacturing Is Considering Issuing 18-Year,7

Cannon Manufacturing is considering issuing 18-year,7.8% annual coupon,$1,000 face value convertible bonds at a price of $1,000 each.Each bond would be convertible into 22 shares of common stock.If the bonds were not convertible,investors would require an annual yield of 11.8%.The stock's current price is $22.00,its expected dividend is $2.60,and its expected growth rate is 5.9%.The bonds are noncallable for 10 years.What is the bond's conversion value in Year 5? Do not round your intermediate calculations.

A) $709.12
B) $773.58
C) $644.65
D) $547.95
E) $676.88