Determine the net increase in share premium on July

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Question - On July 1, 2019, a corporation issued 4,000 of its 6-year, P1,000 face value, 8% convertible bonds at par. Interest is payable every June 30 and December 31.

On the date of issue, the prevailing market interest rate for similar debt without the conversion option is 10%.

On July 1, 2020, an investor tendered 1,500 bonds for conversion into 100,000, P10 par value, ordinary shares of the corporation.

Determine the net increase in share premium on July 1, 2020 due to the conversion of the bonds. Round off present value factors to four decimals.

Reference no: EM132981183

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