Question

XYZ Corp. has issued $30 million of debentures. Each bond issued has a warrant attached enabling the holder to buy three shares of XYZ common at $30 per share. If all of the warrants are exercised, XYZ Corp. will receive:_____.
A) $19.8 million.
B) $6.6 million.
C) $9 million.
D) $2.7 million.

Answer 1

Answer: D) $2.7 million

Explanation:

Debentures are sold per $1,000 which means that out of $30 million there are;

= 30,000,000/ 1,000

=30,000 bonds.

Each bond is entitled to 3 shares;

= 30,000 * 3

= 90,000 shares.

Price of $30

= 90,000 * 30

= $2,700,000