Shearson PLC's stock sells for $42 per share. The company wants to sell some 15-year, annual interest, $1,000 par value bonds. Each bond will have attached 66 warrants, each exercisable into one share of stock at an exercise price of $47. Shearson's straight bonds yield 11 percent. The warrants will have a market value of $2.50 each when the stock sells for $42. What is the current value of the warrants attached to each bond?

Answer rating: 100% (QA)

The current value of the warrants attached to each bond can be calculated using the following formul... View the full answer