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Question: Florida Enterprises is considering issuing a 15-year convertible bond that will be priced at its $1,000 par value. The bonds have an 6.0 percent annual coupon rate, and each bond has a conversion price of $50. The stock currently sells at $35 a share, has an expected stock price growth rate of 4.0 percent into the future. What is the estimated floor price of the convertible at the end of Year 5 if the required rate of return on a similar straight-debt issue is 8.0 percent?

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