What coupon rate should be set on the bonds-with-warrants

Reference no: EM131997161

Question: McDaniels Company plans to issue 20-year bonds with annual interest payments and with 25 warrants attached. The investment banker estimates that each warrant will have a value of $5.00. A similar straight-debt issue would require a 10% coupon. What coupon rate should be set on the bonds-with-warrants so that the package will sell for $1,000?

Reference no: EM131997161

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