medium · Investment Banking
Which of the following describes the 'If-Converted' method for treating in-the-money convertible bonds in an enterprise value calculation?
- Only include the interest payments as a debt-like obligation in the bridge
- Assume the bond is converted into equity, add the resulting shares to the diluted count, and exclude the bond's principal from total debt
- Treat the bond as debt, but add the value of the conversion option to the equity value
- Subtract the bond's face value from the cash balance to reflect the future repayment
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