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Srorm Software wants to issue $130 million ($1,300 x 100,000 bonds) in new capital to fund new opportunities. If Storm raised the $130 million of

Srorm Software wants to issue $130 million ($1,300 x 100,000 bonds) in new capital to fund new opportunities. If Storm raised the $130 million of new capital in a straight-debt 20-year bond offering, Storm would have to offer an annual coupon rate of 11%. However, Storm's advisers have suggested a 20-year bond offering with warrants. According to the advisers, Storm could issue 9% annual coupon-bearing debt with 20 warrants per $1,300 face value bond. Storm has 10 million shares of stock outstanding at a current price of $30. The warrants can be exercised in 10 years (on December 31, 2025) at an exercise price of $35. Each warrant entitles its holder to buy one share of Storm Software stock. After issuing the bonds with warrants, Storm's operations and investments are expected to grow at a constant rate of 10.6% per year.

A. If investors pay $1,300 for each bond, what is the value of each warrant attached to the bond issue? Round your answer to the nearest cent. $

B. What is the component cost of these bonds with warrants? Round your answer to two decimal places. %

C. What premium is associated with the warrants? Round your answer to two decimal places. %

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