Automatic Data Processing recently issued $150 million of 612 percent convertible debentures maturing in 2011 The debentures are convertible into common stock at $83 45 a share The companys common stock was trading at about $67 a share when the convertibles were issued a How many shares of common stock can be obtained by converting one $1,000 par value debenture that is, what is the conversion ratio b What was the conversion value of this issue when these debentures were originally issued c By what percentage was the conversion price above the stock price when these debentures were originally issued

Question: Automatic Data Processing recently issued $150 million of 612 percent convertible debentures maturing in 2011. The debentures are convertible into common stock at $83.45 a

Automatic Data Processing recently issued $150 million of 61⁄2 percent convertible maturing in 2011. The are convertible into at $83.45 a share. The company’s was trading at about $67 a share when the convertibles were issued.
a. How many shares of can be obtained by converting one $1,000 debenture; that is, what is the conversion ratio?
b. What was the conversion value of this issue when these were originally issued?
c. By what percentage was the conversion price above the stock price when these were originally issued?

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