### Determine the formula value and premium

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##### Reference no: EM131334884

The Monroeville Company has warrants outstanding that expire in five years. Each warrant entitles the holder to purchase 0.5 shares of common stock at an exercise price of \$32 per share.

Determine the formula value and premium over the formula value if the respective prices of common stock and warrants are:

a. \$30 per share and \$1 per warrant

b. \$32 per share and \$2 per warrant

c. \$38 per share and \$3.50 per warrant

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