2. In class we did: Company issues $50,000,000 of bonds with warrants to make a new investment. The company currently has 10,000,000 shares common stock outstanding, its tax rate is 40% and its basic earning power is 13.50%. The bonds has an 8% coupon, annual payments, mature in 20 years. Each bond comes with 20 warrants where the holder may purchase one share of stock per warrant at a price of $22. The warrants expire in 10 years. The current value of the company is $250,000,000; earnings are expected to grow at 9% per year after the new investment, and straight debt is priced to yield 10%. 2. In class we did: Company issues $50,000,000 of bonds with warrants to make a new investment. The company currently has 10,000,000 shares common stock outstanding, its tax rate is 40% and its basic earning power is 13.50%. The bonds has an 8% coupon, annual payments, mature in 20 years. Each bond comes with 20 warrants where the holder may purchase one share of stock per warrant at a price of $22. The warrants expire in 10 years. The current value of the company is $250,000,000; earnings are expected to grow at 9% per year after the new investment, and straight debt is priced to yield 10%