Maese Industries Inc. has warrants outstanding that permit the holders to purchase 1 share of stock per warrant at a price of $21. The data has been collected in the Microsoft Excel Online file below. Open the spreadsheet and perform the required analysis to answer the question below. X Open spreadsheet a. Calculate the exercise value of the firm's warrants if the common sells at each of the following prices: (1) $20, (2) $25, (3) $30, (4) $100. (Hint: A warrant's exercise value is the difference between the stock price and the purchase price specified by the warrant ir the warrant were to be exercised.) Do not round Intermediate calculations. Round your answers to the nearest dollar $ $ (1) $20 (2) 25 (3) 30 (4) 100 5 $ b. Assume the firm's stock now sells for $20 per share. The company wants to sell some 20-year, $1,000 par value bonds with interest paid annually. Each bond will have attached 50 warrants, each exercisable into 1 share of stock at an exercise price of $25. The firm's straight bonds yield 10%. Assume that each warrant will have a market value of $2.25 when the stock sells at $20. What coupon interest rate and dollar coupon must the company set on the bonds with warrants if they are to clear the market? (Hint: The convertible bond should have an initial price of $1,000.) Do not round intermediate calculations. Round your answer for coupon interest rate to two decimal d. Laculote ne uvaju ut unums worranus hucum nu in uw pan. (1>cu, 145, PJ, $100. (Mint: A warrant's exercise value is the difference between the stock price and the purchase price specified by the warrant in the warrant were to be exercised.) Do not round Intermediate calculations. Round your answers to the nearest dollar $ (1) $20 (2) 25 (3) 30 $ $ (4) 100 $ b. Assume the firm's stock now sells for $20 per share. The company wants to sell some 20-year, $1,000 par value bonds with interest pold annually. Each bond will have attached So warrants, each exercisable into 1 share of stock at an exercise price of $25. The firm's straight bonds yield 10%. Assume that each warrant will have a market value of $2.25 when the stock sells at $20. What coupon interest rate and dollar coupon must the company set on the bonds with warrants if they are to clear the market? (Mint: The convertible and should have an initial price of $1,000.) Do not round Intermediate calculations. Round your answer for coupon interest rate to two decimal places. Round your answer for dollar coupon to the nearest dollar, Coupon Interest rate: 96 Dollar coupons Check My Work Reset Problem A 1 Warrants D G NON Exercise price Current stock price $21 $20 Annual Coupon Bond issue with Warrants Length of maturity in years) Par value 9 Number of warrants attached to one bond 10 Yield on annual bonds with no warrants 11 Market value of each warrant 12 Calculation of Exercise Value of Warrants at Durant Stock Prices: 20 $1,000 50 10% $2.25 14 Exercise Price Exer Valu 521 16 usbB Stock Price $20 $25 $30 $100 $21 521 Formulas INJA NA MA NIA 18 19 520 Calculate dollar coupon payment and interest rate on bond with warrants to the market: 20 Formulas
