Suppose an All-Equity Firm Has a Value of $10,000 and 100

question 175

Multiple Choice

Suppose an all-equity firm has a value of $10,000 and 100 shares outstanding. The firm has issued 25 warrants, each of which may be exchanged for one share. The warrants have an exercise price of $75. If the firm will be worth $9,800 in one period (before exercise) , what will the price of the shares be assuming the warrants are exercised?

• A) $88.20
• B) $91.60
• C) $93.40
• D) $96.00
• E) $98.40

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Definitions:

Public Good

An offering of goods or services to all society members without any profit, provided by either governmental bodies or private sectors.

Marginal Cost

The financial outlay for producing an additional unit of a product or service.

Public Good

A product or service that is made available to all members of a society, typically funded by the public sector, and is characterized by its non-excludability and non-rivalry.

Weather Warning System

A technology or protocol designed to alert the public of impending severe weather conditions.