Suppose orange inc. is considering a new product launch, ceo asks for your : the new project is to produce ophone 6super (just a little more expensive than current version, other than that, you can't tell the difference). it will cost $72,000 to purchase new equipment, which has a three-year life and no salvage value; depreciation is straight-line to zero. the ophone price will be sold at $500 each, no discount at any time, variable cost per unit is $200, costs would be $5,000 per year, tax rate is 35%. annual market consumption of mobile phones is 300, orange and singsong split the market, with 50% market share each. in addition, orange is filing a against singsong, if orange wins a patent verdict against singsong, lawsuit market would orange would increase its market share up to 90%, otherwise, orange's share drop to 10%. required rate of return is 15%.

On january 1, 2018, gless textiles issued $12 million of 9%, 10-year convertible bonds at 101. the bonds pay interest on june 30 and december 31. each $1,000 bond is convertible into 40 shares of gless’s no par common stock. bonds that are similar in all respects, except that they are nonconvertible, currently are selling at 99 (that is, 99% of face amount). century services purchased 10% of the issue as an investment. on january 1, 2018, gless textiles issued $12 million of 9%, 10-year convertible bonds at 101. the bonds pay interest on june 30 and december 31. each $1,000 bond is convertible into 40 shares of gless’s no par common stock. bonds that are similar in all respects, except that they are nonconvertible, currently are selling at 99 (that is, 99% of face amount). century services purchased 10% of the issue as an investment. 3. on july 1, 2023, when gless’s common stock had a market price of $33 per share, century converted the bonds it held. prepare the journal entries by both gless and century for the conversion of the bonds (book value method).