How much are Justin’s warrants worth in total? Justify your answer and show the details of your estimation.

Justin Barlow sat on his yacht as he sailed off the Nantucket sound and scanned the Wall Street Journal. He noticed that New Benson Labs December call options with a $30 exercise price were selling for a premium of $4.75. There had been 600 million shares outstanding when FOY, Inc. declared bankruptcy, which translated into 60 million warrants issued to shareholders. Justin owned 10% of the outstanding equity of FOY at the time of the bankruptcy filing. New Benson Labs had 240 million shares outstanding at the present time. Justin picked up his cell phone and hit the speed dial for his personal wealth manager.

Answer rating: 100% (QA)

To determine the value of Justins warrants we need to first calculate the number of warrants he owns Since there were 600 million shares outstanding when FOY Inc declared bankruptcy and Justin owned 1... View the full answer