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. HHI 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 if the warrant were to be exercised.) Do not round Intermediate calculations, Round your answers to the nearest dollar $ (1) $20 (2) 25 $ (3) 30 $ 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 paid annually, Each bond will have attached 50 warrants, each exercisable into 1 share of stock at an exercise orice of $25. The firm's stralaht bonds vield 12% exercised.) Do not round intermediate calculations, Round your answers to the nearest dollar. (1) $ 20 $ (2) 25 $ (3) 30 $ 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 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 12% Assume that each warrant will have a market value of s2 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 places. Round your answer for dollar coupon to the nearest dollar Coupon interest rate: Dollar coupon: $ Arial V 10 > 5 v > ... > Cur A B D Warrants Exercise price Current stock price $21 $20 5 Annual Coupon Bond Issue with Warrants: Length of maturity (in years) B 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 13 Warrants at Different Stock Prices: 20 $1,000 50 12% $2.00 & Exercise Price Exercise Value 14 15 16 17 18 Stock Price $20 $25 $30 $100 $21 $21 $21 $21 Formulas #NA #NA #NA #NA Sheet1 Calculation Mode: Automatic Workbook Statistics Type here to search w File Home Insert Formulas Data Review View Help Tell me what you want to do v v Arial 10 V . V .. Currency D15 B C A Warrants at Different Stock Prices: D E 13 Exercise Value $21 $21 Formulas #NA #NA #NA #NA $21 $21 no 14 Stock Price Exercise Price 15 $20 16 $25 17 $30 18 $100 19 Calculate dollar coupon payment and interest rate on bond with warrants to 20 clear the market: Formulas 21 Value of the bond, V ANA 22 Coupon interest rate on bond #NA 23 Dollar coupon payment on bond #N/A 24 25 26 27 28 29 Sheet1 + Calculation Mode: Automatic Workbook Statistics Type here to search o
