Vernon Corporation offered detachable 5-year warrants to buy one ordinary share (par value $5) at...
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Vernon Corporation offered detachable 5-year warrants to buy one ordinary share (par value $5) at $20 (at a time when the shares were selling for $32). The price paid for 2,000, $1,000 bonds with the warrants attached was $205,000. The market price of the Vernon bonds without the warrants was $180,000, and the market price of the warrants without the bonds was $20,000. What amount should be allocated to the warrants?
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