The required return on this bond is 8 percent what value


You have been hired to value a new 30-year callable, convertible bond. The bond has a 5.2 percent coupon, payable annually. The conversion price is $94, and the stock currently sells for $36.10. The stock price is expected to grow at 13 percent per year. The bond is callable at $1,300, but, based on prior experience, it won’t be called unless the conversion value is $1,400. The required return on this bond is 8 percent. What value would you assign to this bond? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)

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Financial Management: The required return on this bond is 8 percent what value
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