OSIM is considering three options to raise the required funds for the new product.

Option 1: Issue convertible bond for $15 million with a coupon rate of 2.75% at nominal value of $1 per bond. The contracted interest rate on the bond is 2.75% per annum, but excluding the equity conversion option, the effective interest rate is 4% per annum. The bonds mature in 5 years from the issue date at the principal amount together with the unpaid interest unless converted to ordinary shares at the rate of $2.025 per share. The holder of convertible bond has the right to acquire the shares of company to redeem the bond three years from the issue of the bond.

Option 2: Issue a bond with no convertible option for $15 million with a coupon rate of 2.75% at a nominal value of $1 per bond. The effective interest rate in the market is 5% for these bonds. The bonds mature 5 years from the issue date at the principal amount together with the unpaid interest.

Option 3: Raise the required amount by issuing common shares at $1.80 per share.

Compare the three options listed above, and discuss which option OSIM should adopt