Answer : $2.52
Calculation :
Ordinary bond current value = pv(rate,nper,pmt,fv)
= pv(8%,10,65,1000)
= $ 899.35
Current value of bind (with warrent)= 1000
Warrant value = Current Value of Bond with warrant - Ordinary bond current value
Warrant value = 1000 - 899.35
Warrant value = $ 100.65
No of Warrant with a bond = 40
Value of one warrant = Warrant value /No of Warrant with a bond
Value of one warrant = 100.65/40
Value of one warrant = $ 2.51625 or $2.52
10 A bond with 40 detachable warrants has just been offered for sale at $1,000. The...
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last option is 19.03 Het A bond with 20 detachable warrants has just been offered for sale at $1,000. The bond matures in 15 years and has an annual coupon of $105. Each warrant gives the owner the right to purchase two shares of stock in the company at $15 per share. Ordinary bonds (with no warrants) of similar quality are priced to yield 17 percent. What is the value of one warrant? Multiple Choice $17.30 $32.70 $20.76 $15.57
Problem 11 Irish, Inc. issues 1,000 shares of $100 par, 10% preferred stock with detachable warrants. The package of one share of stock and one warrant sells for $110. Each warrant enables the holder to purchase five shares of no-par common stock at $40 per share. Immediately following the issuance of the stock, the stock warrants are selling are selling at $12 per warrant. The market value of the preferred stock without the warrants is $108 per share. Prepare the...
Problem 11 Irish, Inc. issues 1,000 shares of $100 par, 10% preferred stock with detachable warrants. The package of one share of stock and one warrant sells for $110. Each warrant enables the holder to purchase five shares of no-par common stock at $40 per share. Immediately following the issuance of the stock, the stock warrants are selling are selling at $12 per warrant. The market value of the preferred stock without the warrants is $108 per share. Prepare the...
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E16-7 (L02) (Issuance of Bonds with Warrants) Illiad Inc. has decided to raise additional capital by issuing $170,000 face value of bonds with a coupon rate of 10%. In discussions with investment bankers, it was determined that to help the sale of the bonds, detachable stock warrants should be issued at the rate of one warrant for each $100 bond sold. The value of the bonds without the warrants is considered to be $136,000, and the value of the warrants...
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