Determining the conversion value of the bond, Accounting Basics

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Determining the conversion value of the bond

Problem:

The common stock of Southern Airlines currently sells for $33, and its 8% convertible debentures (issued at par, or $1,000) sell for $850. Each debenture can be converted into 25 shares of common stock at any time before 2025.

Required:

Question: What is the conversion value of the bond?

Note: Show supporting computations in good form.

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Accounting Basics: Determining the conversion value of the bond

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Accounting Basics: Determining the conversion value of the bond

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