Lucas is marketing manager for monster, a producer of energy drinks. a primary market segment targeted by monster is the fitness market. lucas estimates that the size of this market exceeds $6.3 billion per year. in addition, lucas estimates that monster can garner 12% of this market, worth about $.756 billion. the upper estimate of $6.3 billion is .

Mae jong corp. issues $1,000,000 of 10% bonds payable which may be converted into 10,000 shares of $2 par value ordinary shares. the market rate of interest on similar bonds is 12%. interest is payable annually on december 31, and the bonds were issued for total proceeds of $1,000,000. in accounting for these bonds, mae jong corp. will: (a) first assign a value to the equity component, then determine the liability component. (b) assign no value to the equity component since the conversion privilege is not separable from the bond.(c) first assign a value to the liability component based on the face amount of the bond.(d) use the “with-and-without” method to value the compound instrument.