What is the value of each warrant

Reference no: EM13297697

Thomson Engineering is issuing new 15-year bonds that have warrants attached. If not for the attached warrants, the bonds would carry a 9% interest rate. However, with the warrants attached the bonds will pay a 6% annual coupon and can still be issued at the par value of $1,000. There are 30 warrants attached to each bond. What is the value of each warrant?

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a) $7
b) $8
c) $9
d) $10
e) $11

Reference no: EM13297697

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