The firms straight bonds yield 10 each warrant is expected

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Warren Corporation's stock sells for $42/share. The company wants to sell some 20-year annual interest, $1000 par value bonds. Each bond would have 75 warrants attached to it, each exercisable into 1 share of stock at an exercise price of $47. The firm's straight bonds yield 10%. each warrant is expected to have a market value of $2.00 given that the stock sells for $42. What coupon interest amount must the company set on the bonds in order to sell the bonds-with-warrants at par?

a) 7.83%

b) 8.24%

c) 8.65%

d) 9.08%

e) 9.54%

Reference no: EM13388961

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