The all equity, non-dividend paying company XYZ Corp has 800 shares outstanding. XYZ Corp is just about to issue 200 European warrants, each of which is exercisable into 2 shares at a price of 12 per share. The maturity date of the warrants is in four years. XYZ Corp has negotiated a deal whereby the warrants are going to be sold for 10 each, thus the entire warrant issue will raise 2000. Currently, i.e. before selling the warrants, the value of XYZ Corp's assets is 8000 . XYZ has an annualized volatility of 20%. The risk-free rate is 10% per year.

Please write the specific steps

(a) calculate the d1, d2, and value of warrant?

(b)what will be the share price once warrant are issued?

(c)Suppose now that XYZ will pay a dividend totaling 4800 to its existing shares in four years if and only if the warrants are exercised. Continue to assume that the warrants are sold for 2000 . Immediately after the issue, what are the warrants worth?

(d)Suppose now that XYZ will pay a dividend totaling 4800 to its existing (i.e. old) shares in four years if and only if the warrants are exercised. Continue to assume that the warrants are sold for 2000 . What will the share price be once the warrants are issued?