CIMA Financial Strategy F3 Question # 113 Topic 12 Discussion

CIMA Financial Strategy F3 Question # 113 Topic 12 Discussion

F3 Exam Topic 12 Question 113 Discussion:
Question #: 113
Topic #: 12

A company has 8% convertible bonds in issue. The bonds are convertible in 3 years time at a ratio of 20 ordinary shares per $100 nominal value bond.

 

Each share:

   • has a current market value of $5.60

   • is expected to grow at 5% each year

What is the expected conversion value of each $100 nominal value bond in 3 years' time? 


A.

$129.6


B.

$117.6


C.

$100.0


D.

$112.0


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