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c) for cash and bond offer, bond value is $5 per share which is the nominal value of debt per share. why we are not using market value of convertible bond( which have to calculate the conversion value of debt) and divided by the number of shares?
Your point is valid.
However the problem is that we do not know the market value of the bond because we do not know what will happen to the share price.
The examiner does make this point in the discussion below the figures – that the bonds could be even more attractive because the value of the shares could increase.
Including mention of that would get marks in the exam.
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