Problem:
Gregg Company recently issued two types of bonds. The first issue consisted of 20-year straight (no warrants attached) bonds with an 9% annual coupon. The second issue consisted of 20-year bonds with a 6% annual coupon with warrants attached. Both bonds were issued at par ($1,000).
Required:
Question: What is the value of the warrants that were attached to the second issue?
Note: Please show how you came up with the solution.