Million shares of common stock outstanding

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Meg and Sons Incorporated has 1 million shares of common stock outstanding, which sell for $40 per share. The company plans to issue $10 million face value in 5-year notes. Each $1,000 par value bond has 20 attached warrants, granting investors the right to purchase Meg and Sons stock for $55 within five years.

If the risk-free rate is 5% and the standard deviation of Meg and Sons shares is 30 percent, what is the value of the warrants? Round your answer to the nearest cent.
$

Reference no: EM13500161

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