In the previous problem, if the interest rates on similar bonds, which are not convertible, go up

Question:

In the previous problem, if the interest rates on similar bonds, which are not convertible, go up from 10 to 12 percent, what will the new pure bond value be for Hamilton Steel Company bonds? Assume the Hamilton Steel Company bonds have the same coupon rate of 8 percent as described in the previous problem and that 25 years remain to maturity. Use semiannual analysis.

Data from Previous Problem

Hamilton Steel Company has a convertible bond outstanding, trading in the marketplace at $930. The par value is $1,000, the coupon rate is 8 percent, and the bond matures in 25 years. The conversion price is $50, and the company's common stock is selling for $44 per share. Interest is paid semiannually.

Common Stock
Common stock is an equity component that represents the worth of stock owned by the shareholders of the company. The common stock represents the par value of the shares outstanding at a balance sheet date. Public companies can trade their stocks on... Coupon
A coupon or coupon payment is the annual interest rate paid on a bond, expressed as a percentage of the face value and paid from issue date until maturity. Coupons are usually referred to in terms of the coupon rate (the sum of coupons paid in a... Par Value
Par value is the face value of a bond. Par value is important for a bond or fixed-income instrument because it determines its maturity value as well as the dollar value of coupon payments. The market price of a bond may be above or below par,...

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