Hannon Home Products Inc. recently issued $2.8 million worth of 6 percent convertible debentures. Each convertible bond has a facevalue of $1,000. Each convertible bond can be converted into 21.3 shares of common stock anytime before maturity. The stock price is$37.95, and the market value of each bond is $1,150. (Do not round intermediate calculations. Round the answers to 2 decimalplaces. Omit $ sign in your response.)a. What is the conversion ratio?Conversion ratio21.30b. What is the conversion price?Conversion price$46.95c. What is the conversion premium?Conversion premium34.17%d. What is the conversion value?Conversion value$808.34e. If the stock price increases by $1, what is the new conversion value?Conversion value$ 829.64

Bonds payable is a type of instrument where by an amount is borrowed for a fixed period with fixed…

Answered: Hannon Home Products Inc. recently…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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