I'm trying to evaluate a convertible bond using the structural approach : the price of convertible bond is an option (call) on the firm value. We suppose that the firm value is equal to the sum of the debt (in this case, convertible bond) and number of stocks multiplied by their market price : $$ V(t) = B(t) + NS(t) $$ The authors of the book where I found this method explain that, at the maturity, the price of the convertible is equal to $B(T) = max[min(V(T), D), \kappa V(T)]$ where $D$ is redemption price and $\kappa$ is the inverse of dilution coefficient. Thus, it the bond price at $t=0$ can be calculated using binomial tree method.
There is one thing that I don't inderstand, the CB price is equal to the option on firm value, but the firm value depends on CB price, too. How can I estimate the firm value $V(T)$ ?
Thank you in advance for your help !