Conversion Value

The finance director of Coral Co has been asked to provide values for the company's equity and loan notes. Coral Co is a listed company and has the following long-term finance: $m Ordinary shares 7.8 7% convertible loan notes 8.0 15.8 The ordinary shares of Coral Co have a nominal value of $0.25 per share and are currently trading on an ex dividend basis at $7.10 per share. An economic recovery has been forecast and so share prices are expected to grow by 8% per year for the foreseeable future. The loan notes are redeemable after 6 years at their nominal value of $100 per loan note, or can be converted after 6 years into 10 ordinary shares of Coral Co per loan note. The loan notes are traded on the capital market. The before-tax cost of debt of Coral Co is 5% and the company pays corporation tax of 20% per year. 1. What is the equity market value of Coral Co $_______m?(to two decimal place) 2. Assuming conversion, what is the market value of each loan note of Coral Co______? Hello sir May I know what is meant by conversion here in Q2 and how is it calculated thanks .