On January 1, 2019, Mayleen Company issued 5,000 convertible bonds with P1,000 face value per bond. The bonds matures in three years and are issued at 110. Interest is payable annually every December 31 at nominal 6% interest rate. Each bonds 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?
On January 1, 2019, Mayleen Company issued 5,000 convertible bonds with P1,000 face value per bond. The bonds matures in three years and are issued at 110. Interest is payable annually every December 31 at nominal 6% interest rate. Each bonds 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?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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On January 1, 2019, Mayleen Company issued 5,000 convertible bonds with P1,000 face value per bond. The bonds matures in three years and are issued at 110. Interest is payable annually every December 31 at nominal 6% interest rate. Each bonds 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?
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