12 should not come into it - that is the convergence - the angle between meridians and therefore the change of great-circle track (or straight line on the chart, for chart convergence). You want the change from rhumb line to great circle, which must be conversion angle. Also it cannot be magnetic, as you have no variation in the question! Note I would recommend you make all calculations in True, converting to magnetic at the end if required.
Don't know where you found 118 degrees or where 264 comes from
Try taking htis to your school's Gen Nav instructor, he can draw a diagram which should make it clearer.