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Hello sir,
This question is amended by BPP and added a new part c. It give the market value of convertible loan stock 110 in question. So the MV of 20 convertible loan stock should be 22m with the mv of other debt 23 total 45.
In solution provided why he discounts the outflows to determine the mv of existing convertible when he has provided us with this aleady in the question. Is is telling us theres a typing error in the question ?The current market value is based on investors current expectations.
The question is asking what will happen to the market value in 2 months time – in 2 months time they will know for certain what the value of the shares is and therefore will decide for certain whether to convert or not.
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