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Problem:

Curran Contracting is issuing new 18-year bonds that have warrants attached. If not for the attached warrants, the bonds would carry an 11% annual interest rate. However, with the warrants attached the bonds will pay an 8% annual coupon. There are 30 warrants attached to each bond, which have a par value of $1,000.

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Question: What is the implied value of each warrant?

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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M91168033

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