MEGAZONE MANUFACTURING plc has issued C¼10,000,000 worth of convertible bonds with a 7% coupon (interest payable on the face or par value of the bond), which mature in three years. The C¼100 par value bonds are trading currently at C¼112. An investor has asked you whether she should convert the bonds to ordinary shares, as this is the last day of the conversion period. The terms specify a conversion price of C¼2.50, and the share sells currently for C¼2.85. Explain what the investor should do and why. State any necessary assumptions.