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LPV Inc. wants to issue 20-year bonds with 15 warrants attached. The investment bankers estimate that each warrant will have a value of $15.00 and
LPV Inc. wants to issue 20-year bonds with 15 warrants attached. The investment bankers estimate that each warrant will have a value of $15.00 and that its exercise price will be equal to $25. A similar straight-debt issue would require a 12% coupon. What coupon rate should be set on the bonds-with-warrants so that the package would sell for $1,000? *
1) 6.98%
2) 7.56%
3) 8.47%
4) 8.99%
5) None of the above
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