What is the equity component of the original issuance

Reference no: EM132789485

Problem 1: An entity issued 5,000 convertible bonds with P1,000 face amount per bond. The bonds mature in three years and are issued at 110. Interest is payable annually every December 31 at a nominal 6% interest rate. Each bond is convertible at anytime up to maturity into 100 shares with par value of P5. It is reliably determined that the bonds would sell only at P4,600,000 without the conversion privilege. What is the equity component of the original issuance of the convertible bonds?

Reference no: EM132789485

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