Daniels, Inc. has assets valued at $2 million and 50,000 outstanding shares. A 5-year zero-coupon bond exists, which pays $400,000 at maturity
The bond is convertible into 10,000 shares. Assume ? = 0.30, r = 0.055, and no dividend is paid. What is the value of the bond?
A)
$402,672
B)
$452,172
C)
$415,022
D)
$385,172
Answer:
A
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