Question: A convertible bond issued by firm BigRed has a conversion ratio of 20 , coupon rate of 6.7% (interest paid annually), maturity of 8 years,

A convertible bond issued by firm BigRed has a conversion ratio of 20 , coupon rate of 6.7% (interest paid annually), maturity of 8 years, yield to maturity of 6%, and par value of $1,000. The yield to maturity of a non-convertible bond issued by the same firm is 8.2%. BigRed's stock price is currently $39.71 and the stock pays an annual dividend of $1.61 per share. All rates are annualized assuming periodicity of 1 (i.e. annual compounding). What is the minimum value of BigRed's convertible bond? (If your solution is $4.44 then enter "4.44" as the answer. Precision is 0.01+10.02.)

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