Consider the following information Pre-exercise entity value of $3,000 (suppose the enterprise value, exclusive of the warrant
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Question:
Consider the following information
Pre-exercise entity value of $3,000 (suppose the enterprise value, exclusive of the warrant proceeds, is $3,000)
$3,000 divided among 15 shares & 5 warrants
Suppose maturity is 6 months from now; strike price is $100; risk-free rate is 5%; current stock price is $300; standard deviation is 0.22
Warrant as optioning 1/25 of 15 calls on entity per existing share ($300)
Determine the value of call option, warrant value, and the value per share of existing 15 shares.
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