Outer Wear has 12,000 shares of stock outstanding. Each share has a .5 warrant attached. These warrants expire today. The market value of the firm's assets net of its debt is $192,000. One new share can be obtained for one warrant plus $18. Assuming all else held constant, what would you expect the market price per share to be tomorrow morning when the stock market opens?
A) $16.67
B) $15.33
C) $16.00
D) $18.00
E) $17.50
C) $16.00
Explanation: Market value per share = Total value/Number of shares
Market value per share = $192,000/12,000
Market value per share = $16
Since the exercise price exceeds the market price, the warrants will not be exercised.
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