Bonds with detachable warrants are issued with a face amount of $100000 at 105. Each $1000 bond has 10 warrants attached. Each warrant entitles the holder to purchase one share of $1 per common stock for $50.
Questions:
1. Determine the Fair Values?
2. Determine the Allocation of the bonds?
3. Determine the Allocation to the Warrants?
Please give a detailed solution with the formulat.