Thomson Engineering Is Issuing New 19-Year Bonds That Have Warrants

question 48

Multiple Choice

Thomson Engineering is issuing new 19-year bonds that have warrants attached.If not for the attached warrants,the bonds would carry a 12.3% annual interest rate.However,with the warrants attached the bonds will pay an 8.2% annual coupon.There are 30 warrants attached to each bond,which have a par value of $1,000.What is the value of the straight-debt portion of the bonds? Do not round your intermediate calculations.

• A) $738.62
• B) $773.80
• C) $668.28
• D) $703.45
• E) $844.14

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Definitions:

Gallbladder

A small organ located beneath the liver that stores and concentrates bile, aiding in the digestion of fats.

Pancreas

An organ in the body that produces insulin and enzymes important for digestion.

Oral Cavity

The mouth's internal space, including the lips, gums, teeth, tongue, palate, and the opening to the throat, integral for speech, breathing, and the initial stages of digestion.

Oral Cavity

The mouth, an opening in the body used for intake of food and liquid, as well as for communication, that includes the lips, tongue, gums, and teeth.