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Warren Corporation’s stock sells for $42 per share.  The company wants to sell some 20-year, annual

Warren Corporation’s stock sells for $42 per share.  The company wants to sell some 20-year, annual interest, $1,000 par value bonds.  Each bond would have 75 warrants attached to it, each exercisable into one share of stock at an exercise price of $47.  The firm’s straight bonds yield 10%.  Each warrant is expected to have a market value of $2.00 given that the stock sells for $42.  What coupon interest rate must the company set on the bonds in order to sell the bonds-with-warrants at par?

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