1. Now suppose the firm finances the project by issuing debt that has higher priority than existing debt. How much must a $10 or $25 project be worth if the shareholders are willing to fund it?
2. Assume there are 20 shares outstanding. Compute the value of the warrant and the share price for each of the following situations.
a. Warrants for 2 shares expire in 5 years and have a strike price of $15.
b. Warrants for 15 shares expire in 10 years and have a strike of $20.
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