Tri-Slope has warrants outstanding in addition to its common stock. There are 5 million shares of stock and 1 million warrants. The stock is selling for $43 each and with each warrant you can buy a new share for $40. 1. Determine the new stock price if all warrants are exercised immediately. 2. If the warrants expire in 6 months and the annual variance is .25 and the risk free rate is 4%, what is the value of a warrant using the Black Scholes model?

• 3. If the company has $86 million in zero coupon debt which is due in 6 months, assume total value of company is 215 million. Determine the value of the warrant.
• 4. If the company has $8.6 million in zero coupon debt which is due in 6 months, assume total value of company is 215 million. Determine the value of the warrant.