What is the value of each warrant

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Reference no: EM131603135

1. Thomson Engineering is issuing new 15-year bonds that have 30 warrants attached. If not for the attached warrants, the bonds would carry a 8% interest rate. However, with the warrants attached the bonds will pay a 7% annual coupon and still sell for the face value of $1,000. What is the value of each warrant?

a) $1.40

b) $2.85

c) $3.75

d) $4.25 15.

2. A firm sells their product for $6 and has variable costs of $4 per unit. Their fixed costs are $200,000 and their interest expense is $50,000. How many units must they sell in order to have income before taxes of $100,000?

a. 125,000

b. 150,000

c. 175,000

d. 200,000

Reference no: EM131603135

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