I agee that the warrant would be worhless if at the end of 5 years K's share price was $25.00.

What we are discussing is the value of the warrant now and what it is likely to trade at.

Thus value is determined by the current K share price ($19.40), the strike price ($32.00) and the number of days to expiry (1,825). The formula used to calculate the vale is called Black-Scholes

Heheh... the same formula that brought down Long Term Capital Mgmt!

ebear