Use the Following Information to Answer the Question(s)below

question 51

Multiple Choice

Use the following information to answer the question(s) below.
d'Anconia Copper is an all-equity firm with 60 million shares outstanding,which are currently trading at $20 per share.Last month,d'Anconia announced that it will change its capital structure by issuing $300 million in debt.The $200 million raised by this issue,plus another $200 million in cash that d'Anconia already has,will be used to repurchase existing shares of stock.Assume that capital markets are perfect.
-The market capitalization of d'Anconia Copper after this transaction takes place is closest to:

• A)$800 million.
• B)$900 million.
• C)$1100 million.
• D)$1200 million.

---

Definitions:

Intervene

To come between disputing parties, events, or processes to alter a result or prevent certain actions.

Angel Investor

A wealthy individual who provides financial backing for small startups or entrepreneurs, often in exchange for ownership equity in the company.

Return

Refers to the income generated from an investment, including dividends, interest, or capital gains, expressed usually as a percentage.

Investment

The act of allocating resources, usually money, with the expectation of generating an income or profit.