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16's assets are currently worth $2,700. In one year, they will be worth either $2,000 or $3,500. The risk-free interest rate is 3.5 percent. Suppose the firm has an outstanding debt issue with a face value of $2,500. What is the current value of the firm's debt? A bond with 15 detachable warrants has just been offered for sale at $1,000. The bond matures in 20 years and has an annual coupon of $115. Each warrant gives the owner the right to purchase two shares of stock in the company at $10 per share. Ordinary bonds (with no warrants) of similar quality are priced to yield 18 percent. What is the value of one warrant? 2