What the liability component of the convertible note

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Problem - If an entity issued a convertible note at a price of $40.00 and it was determined that a debt instrument of similar risk and rate of interest of 10% - but without the option to convert to equity - could be sold for $32.00, what would be the liability component of the convertible note?

a) $40.00

b) $32.00

c) $34.00

d) $36.00

e) $44.00

Reference no: EM132452832

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