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.

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Definitions:

Investing

The practice of assigning funds with the aim of producing income or profit.

Monthly

Occurring every month or once a month.

Compounded Quarterly

A process of calculating interest where the interest earned is added to the principal at the end of every three months, leading to an increase in the amount on which subsequent interest is calculated.

Semi-Annually

Occurring twice a year; typically refers to payments or adjustments made every six months.