Compute the formula value and premium over the formula value

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Reference no: EM13926641

The Monroeville Company has warrants outstanding that expire in five years. Each warrant entitles the holder to purchase 0.5 shares of common stock at an exercise price of $32 per share. Determine the formula value and premium over the formula value if the respective prices of common stock and warrants are:

a. $30 per share and $1 per warrant.

b. $32 per share and $2 per warrant.

c. $38 per share and $3.50 per warrant.

Reference no: EM13926641

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