Currently, XYZ Bhd has profit before tax of RM32,000,000 and 10 million common share outstanding. In order to finance its current project, XYZ Bhd requires RM25,000,000 additional financing and has decided to issue 10-years convertible bonds that pays 9% coupon. The conversion price is RM50, while the current market price of the company is RM40. XYZ Bhd expects its operating profit to increase by 25% after financing with the convertible bond.The tax rate is 25%. You are required to calculate the followings:
a) The conversion ratio
b) The conversion value
c) The conversion premium (in RM)
d) Number of new shares if bond were fully converted
e) Calculate the Earning per share after the issuance of convertible bond 

BOND: CONVERTIBLE BOND

Answer rating: 100% (QA)

Lets calculate the various components based on the information provided a The Conversion Ratio The conversion ratio is the number of common shares eac... View the full answer