Please include formulas and explanations so I can see the steps involved. thank you 1. Eki, Inc.,
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Question:
1. Eki, Inc., a producer of table lamps, has a total of 1,500,000 shares outstanding. The current value of the firm is $15 million (no debt). It issues a total of 50,000 2-year warrants to its two top executives with an exercise price of $30. If the risk-free rate is 10% and if the standard deviation of the Eki stock is 50%, compute the value (price) of each warrant if it can only be exercised on the expiration date.
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Managerial Accounting An Integrative Approach
ISBN: 9780999500491
2nd Edition
Authors: C J Mcnair Connoly, Kenneth Merchant
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