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What amount should be allocated to the warrants

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Reference no: EM132982532

Problem 1: Bonita Industries offered detachable 5-year warrants to buy one share of common stock (par value $5) at $20 (at a time when the stock was selling for $30). The price paid for 700, $1,000 bonds with the warrants attached was $821000. The market price of the Bonita bonds without the warrants was $721000, and the market price of the warrants without the bonds was $90000. What amount should be allocated to the warrants?

a. $91110
b. $90000
c. $107500
d, $104000

Reference no: EM132982532

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