Determine what is a fair price for the warrant

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HAL Computer has 1 million shares of stock outstanding at a current price of $50. To raise money they are going to issue 500,000 five-year warrants with an exercise price of $60.00. The risk-free rate is 10% and the current dividend yield is 2%. The volatility of equity is 20%. What is a fair price for the warrant

Reference no: EM13335031

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