Bonds in order to sell the bonds-with-warrants at par

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Reference no: EM131980984

Warren Corporation's stock sells for $42 per share. The company wants to sell some 20-year, annual interest, $1,000 par value bonds. Each bond would have 75 warrants attached to it, each exercisable into one 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. What coupon interest rate must be set on the bonds in order to sell the bonds-with-warrants at par?

Reference no: EM131980984

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