To raise capital funds, Twixt Inc. issued $2 million worth of debentures with warrants attached. The warrants had an exercise price of $15, and each warrant entitled the holder to two shares of common stock. If the current market price per share of Twixt is $20, what is the formula value of a Twixt warrant?

Question

Quizplus · Accepted Answer

The formula value of a warrant can be calculated as [(Current Market Price - Exercise Price) x Number of Shares per Warrant]. Given the current market price is $20, the exercise price is $15, and each warrant entitles the holder to 2 shares, the calculation is: [(20 - 15) x 2] = $10.

To Raise Capital Funds, Twixt Inc