Use the Following Information for Questions 12 and 13

question 5

Multiple Choice

Use the following information for questions 12 and 13
Florence Inc. issued 8,000, 5-year convertible bonds of $2,000 each for $4,000,000 at the beginning of 2012. 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 equity component using the "with-and-without" method.

• A) $3,848,288
• B) $2,483,600
• C) $1,365,688
• D) $ 151,712

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Definitions:

Neuroticism

A characteristic of personality identified by feelings of emotional unpredictability, worry, fluctuating moods, quick temper, and melancholy.

Self-Concept

An individual’s perception of themselves, encompassing self-awareness, self-esteem, and the personal identity they recognize as their own.

Compatible

Being able to exist or work together in combination without conflict or problems.

Clear Elements

Essential aspects or components that are easily understood and free from ambiguity or complexity.