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

question 37

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.
-At the conclusion of this transaction,the value of a share of d'Anconia Copper will be closest to:

• A)$18.33.
• B)$20.00.
• C)$25.00.
• D)$27.50.

---

Definitions:

Market Adjustment

Market Adjustment refers to the changes in price levels and economic variables in response to supply and demand dynamics.

Economic Losses

The difference when total costs exceed total revenues, indicating that a business is not profitable.

Demand for Corn

The quantity of corn that consumers are willing and able to purchase at a given price, influenced by factors such as price, income, and substitutes.

Corn Farmers

Agricultural producers who specialize in the cultivation of corn crops.