# Question: Assume there are 20 shares outstanding Compute the value of

Assume there are 20 shares outstanding. Compute the value of the warrant and the share price for each of the following situations.

a. Warrants for 2 shares expire in 5 years and have a strike price of $15.

b. Warrants for 15 shares expire in 10 years and have a strike of $20.

a. Warrants for 2 shares expire in 5 years and have a strike price of $15.

b. Warrants for 15 shares expire in 10 years and have a strike of $20.

**View Solution:**## Answer to relevant Questions

A firm has outstanding a bond with a 5-year maturity and maturity value of $50, convertible into 10 shares. There are also 20 shares outstanding. What is the price of the warrant? The share price? Suppose you were to compute ...As discussed in the text, compensation options are prematurely exercised or canceled for a variety of reasons. Suppose that compensation options both vest and expire in 3 years and that the probability is 10% that the ...The strike price of a compensation option is generally set on the day the option is issued. On November 10, 2000, the CEO of Analog Devices, Jerald Fishman, received 600,000 options. The stock price was $44.50. Four days ...Nowsuppose the firm finances the project by issuing debt that has lower priority than existing debt. How much must a $1, $10, or $25 project be worth if the shareholders are willing to fund it? Consider the last row of Table 17.1. What is the solution for S*and S* when Ks = kr = 0? (This answer does not require calculation.)Post your question