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    Bond with Warrants

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    Name______________________________________

    FINC 5880
    Session 9

    a. Calculate the value of the debt portion of the bonds with warrants.

    Stock price $30
    Bonds-life and par value 20
    Par value $1,000
    # of warrants per bond 40
    Exercise price $36
    Warrant market value @ P=$30) $0.75
    Yield on straight bonds 8%

    b. Calculate the dollar coupon amount per bond with warrants.

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    https://brainmass.com/business/finance/bond-warrants-615713

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    Question. Assume the firm's stock now sells for $30 per share. The company wants to raise $20 million by issuing 20-year, annual interest, $1,000 par value bonds. Each bond will have 40 warrants attached, each exercisable into 1 share of stock at an exercise price of $36. The firms straight bonds yield 8%. Each warrant is expected to have a market value of $0.75 when the stock sells at $30. The company wants to establish a coupon interest rate and dollar coupon to ensure that the bonds will clear the market.

    a. Calculate the value of the debt portion of the bonds with warrants.

    Stock price $30
    Bonds-life and par value 20
    Par value $1,000
    # of warrants per bond 40
    Exercise price $36
    Warrant market value @ P=$30) $0.75
    Yield on straight bonds 8%

    # of warrants per ...

    Solution Summary

    Calculates
    1) the value of debt portion for a bond with warrants
    2) the coupon payment for such a bond.

    Also lists the advantages of a bond with warrants for issuer as well as investor

    $2.19