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1) The Random Corporation is setting its terms on a new issue with warrants. The bonds have a 30-year maturity and semiannual coupon. Each bond will have 20 warrants attached that give the holder the right to purchase one share of Random stock per warrant. Random s investment banker estimates that each warrant has a value of $14.20. A similar straight-debt issue would require a 10 percent coupon. What coupon rate must be set on the bonds so that the package will sell for $1000a. 6.00%b. 7.00%c. 8.00%d. 9.00%e. 10.00%2) Northeast Company has 200000 shares of common stock and 50000 warrants outstanding. Each warrant entitles its owner to buy one share at a price of $20 before 2010. The firm s basic earnings per share is $2.50. What is the firm s diluted earnings per sharea. $2.50b. $2.25c. $1.50d. $3.00e. $2.003) Texas Products Inc. has a division that makes burlap bags for the citrus industry. The division has fixed costs of $10000 per month and it expects to sell 42000 bags per month. If the variable cost per bag is $2.00 what price must the division charge in order to break evena. $2.24b. $2.47c. $2.82d. $3.15e. $2.00 4) McKenna Motors is expected to pay a $1.00 per-share dividend at the end of the year(D1 = $1.00). The stock sells for $20 per share and its required rate of return is 11 percent. The dividend is expected to grow at a constant rate g forever. What is the growth rate g for this stocka. 5%b. 6%c. 7%d. 8%e. 9%

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