Determine the fair value of the equity component

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Question - Sheffield Corp. issued 9400, 6-year convertible bonds of $2,000 each for $3550000 at the beginning of 2021. The bonds have a stated rate of interest of 9% and interest is payable annually. Each bond can be convertible into 100 shares with a par value of $10. The market rate of similar nonconvertible debt is 10%. Determine the fair value of the equity component using the "with-and-without" method?

Reference no: EM132890791

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