Lane Co has in issue 3% convertible loan notes which are redeemable in five years’ time at
The current share price of Lane Co is $3·60 per share and future share price growth is expected to be 5% per year.
The before-tax cost of debt of these loan notes is 10% and corporation tax is 30%. What is the current market value of a Lane Co convertible loan note?
A.$82·71
B.$73·47
C.$67·26
D.$94·20