Yeast and Company has 5,000 shares of stock outstanding. The market value of Yeast’s assets is \($800,000.\) The market value of its outstanding debt is \($200,000.\) The company issued 100 warrants some time ago that are about to expire. Each warrant gives its owner the right to purchase 10 shares of Yeast stock at a price of \($60\) per share.

a. What is the price per share of Yeast stock? What is the value of one warrant?

b. Create a market value balance sheet for the firm just before and just after the warrants expire.

c. What is the effective exercise price on the warrants?