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Gomez Company issues $3,000,000 of bonds with a coupon rate of 8%. To help the sale, detachable stock warrants are issued at the rate of
Gomez Company issues $3,000,000 of bonds with a coupon rate of 8%. To help the sale, detachable stock warrants are issued at the rate of ten warrants for each $1,000 bond sold. It is estimated that the value of the bonds without the warrants is $2,961,000 and the value of the warrants is $189,000. The bonds with the warrants sold at 101.
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