A company plans to issue 10-year bonds with annual interest payments and with 40 warrants attached. Each warrant is expected to have a value of $1.50. A similar straight-debt issue would require an 11% coupon. What coupon rate should be set on the bonds-with-warrants so that the package will sell for $1,000?
A. 9.98%
B. 10.25%
C. 10.32%
D. 10.97%
E. None of the above