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Problem:

Upstate Water Company just sold a bond with 80 warrants attached. The bonds have a 20-year maturity and an annual coupon of 12%, and they were issued at their $1,000 par value. Currently, the yield on similar straight bonds is 15%.

Required:

Question: What is the implied value of each warrant?

Note: Be sure to show how you arrived at your answer.

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Category:- Basic Finance
Reference No.:- M91148755

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