On January 1, Year 1, ABC Inc

Multiple Choice

On January 1, Year 1, ABC Inc., a publicly traded enterprise, issued $4,000,000 worth of bonds with detachable stock warrants.The bonds mature on December 31st, Year 4 and pay interest annually on December 31st at a coupon rate of 6% per annum.The yield to maturity on similar bonds was 5% at the date of issue.The bonds were issued at 108. Based on the information provided, which of the following statements is most correct?

A) On the date of issue, the bonds would be valued at $4,141,838 and the warrants would be valued at $178,162.
B) On the date of issue, the bonds would be valued at $3,821,838 and the warrants would be valued at $178,162.
C) On the date of issue, the bonds would be valued at $4,000,000 and the warrants would be valued at $320,000.
D) On the date of issue, the bonds would be valued at $4,000,000 and the warrants would be valued at $178,162.