Upstate water company just sold a bond with 50 warrants

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Upstate Water Company just sold a bond with 50 warrants attached. The bonds have a 20-year maturity and an annual coupon of 12%, and they were issued at their $1,000 par value. The current yield on similar straight bonds is 15%. What is the implied value of each warrant?

a) $3.76

b) $3.94

c) $4.14

d) $4.35

e) $4.56

Reference no: EM13477485

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