Compute the value of each warrant

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Reference no: EM131221535

Scandanavia, Inc., a producer of tables, has a total of 2,500,000 shares outstanding. The current value of the firm is $10 million (no debt). It issues a total of 25,000 2-year warrants to its two top executives with an exercise price of $50. If the risk-free rate is 10% and if the standard deviation of the Scandanavia stock is 50%, compute the value (price) of each warrant if it can only be exercised on the expiration date.

Reference no: EM131221535

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