Atlas Anglers Inc

Multiple Choice

Atlas Anglers Inc.is considering issuing a 16-year convertible bond that will be priced at its $1,000 par value.The bonds have a 7.5% annual coupon rate,and each bond can be converted into 21 shares of common stock.The stock currently sells at $38.00 a share,has an expected dividend in the coming year of $3.80,and has an expected constant growth rate of 5.9%.What is the estimated floor price of the convertible at the end of Year 3 if the required rate of return on a similar straight-debt issue is 9.8%? Do not round your intermediate calculations.

A) $947.74
B) $758.19
C) $1,184.68
D) $1,089.90
E) $852.97