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Table Company, wants to sell some 20-year, annual interest, $1,000 par value bonds. Its stock sells for $65 per share, and each bond would have
Table Company, wants to sell some 20-year, annual interest, $1,000 par value bonds. Its stock sells for $65 per share, and each bond would have 80 warrants attached to it, each exercisable into one share of stock at an exercise price of $72. The firm's straight bonds yield 10%. Each warrant is expected to have a market value of $2.2. What coupon interest rate must the company set on the bonds in order to sell the bonds-with-warrants at par? *
a. 7.81%
b. 8.68%
c. 8.47%
d. 7.93%
e. None of the above
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