Replies to post #77 on Sunworks Inc (Warrants) (fka SUNWW)

[SCJCPA]

There is a model used to value warrants which is called the black scholes model. This model traditionally has 6 inputs: stock price, strike price, expected term, volatility, dividends, and risk free rate. I used the number 1.37 as an example how I like to find the risk free rate when I use the black scholes model. The risk free rate is the rate of return you could expect if you invested your money in an investment with no risk i.e. T-Bills.

[Level2Me]

No, that's just a risk free rate that you could have earned if you had your money invested in govt bonds...
If you use volatility of 100% as an example you will arrive at $3.50+ value of the warrant. So if PPS is at 5 and there are five years to expiration any purchase below $3.84 in our example would make mathematical sense. The question remaining is what level of volatility to use for calculations.