On 1/1/16, Edgar Corp. issued $6,500,000 in 4.5%, 15-year Bonds for a price of $6,369,734. Each $1,000
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On 1/1/16, Edgar Corp. issued $6,500,000 in 4.5%, 15-year Bonds for a price of $6,369,734. Each $1,000 (face) Bond includes 10 detachable warrants and each of the 65,000 warrants gives the holder the right to buy 1 share of Edgar’s $1 Par common stock for $42 per share. Edgar’s stock was trading at $42 per share at that time. It is estimated that the bonds would have sold for $5,521,650 without the warrants and that the initial fair value of the warrant was $14 each. What is the change in total shareholders equity, if any, as a result of recording the issuance of the bonds with detachable warrants on 1/1/16?
Related Book For
Fundamentals of Investments
ISBN: 978-0132926171
3rd edition
Authors: Gordon J. Alexander, William F. Sharpe, Jeffery V. Bailey
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