16. Warren Corporations stock sells for $42 per share. The company wants to sell 20-year maturity, semi-annual annual coupon payments bonds at $1,000 (par). Each bond would have 80 warrants attached to it, each exercisable into one share of stock at an exercise price of $47. The firms straight bonds yield to maturity is 8%. Each warrant is expected to have a market value of $4.25 given that the stock sells for $42. What annual coupon rate must the company set on the bonds?