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Cloud Inc's stock sells for $43 per share. The company wants to sell some 20-year, annual interest, $1,000 par value bonds. Each bond would have
Cloud Inc's stock sells for $43 per share. The company wants to sell some 20-year, annual interest, $1,000 par value bonds. Each bond would have 75 warrants attached to it, each exercisable into one share of stock at an exercise price of $49. The firms straight bonds yield 10%. Each warrant is expected to have a market value of $2.00 given that the stock sells for $43. What coupon interest rate must the company set on the bonds in order to sell the bonds-with-warrants at par? YOU MUST USE EXCEL
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