ABC Company recently issued two types of bonds. The first issue consisted of 20 year straight (no warrants attached) bonds with an 8% annual coupon. The second issue consisted of 20 year bonds with a 6% annual coupon with warrants attached. Both bonds were issued at par ($1,000). What is the value of the warrants? (9 marks) Part B(16 marks) Bailey Computers Inc. needs to raise $35 million to begin producing a new micro-computer. Bailey's straight, nonconvertible debentures currently yield 12% Its stock sells for $38.00 per share, the last dividend was $2.46, and the expected growth rate is a constant 8 %. Investment bankers have tentatively proposed that Bailey raise the $35 million by issuing tonvertible debentures. These convertibles would have a $1,000 par value, carry an annual coupon rate of 10%, have a 20 year maturity, and be convertible into 20 shares of stock. Assuming that the bonds will be converted at year 6, when they become callable, what will be the expected return on the convertible when it is issued? (16 marks)