XYZ offered detachable 5-year warrants to buy one share of common stock (par value of $10) at $30 (at a time when the stock was selling for $40). The price paid for 800, $1,000 bonds with the warrants attached was $700,000. The market price of the XYZ bonds without the warrants was $600,000, and the market price of the warrants without the bonds was $75,000. What amount should be allocated to the warrants? The correct answer is A $ 77,778;Explanation?

1. a) $77,778
2. b) $75,000
3. c) $80,000
4. d) $100,000