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Herbert Engineering Is Issuing New 22-Year Bonds That Have Warrants

question 52

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Herbert Engineering is issuing new 22-year bonds that have warrants attached.If not for the attached warrants,the bonds would carry a 10.3% annual interest rate.However,with the warrants attached the bonds will pay a 6.3% annual coupon.There are 30 warrants attached to each bond,which has a par value of $1,000.What is the value of the straight-debt portion of the bonds? Do not round your intermediate calculations.


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