Westover Industries has 600,000 shares outstanding with a market value of $27 a share. Each share has a .2 warrant attached. One warrant plus $25 can be exchanged for one new share of stock. What will be the value of the firm if all the warrants are exercised? Assume all else held constant.
A) $20.9 million
B) $19.2 million
C) $18.4 million
D) $18.9 million
E) $20.2 million
B) $19.2 million
Explanation: Firm value = Original value + Exercise premium
Firm value = 600,000($27) + 600,000/5($25)
Firm value = $19,200,000, or $19.2 million
You might also like to view...
How are the licensing and franchising methods of engaging in international trade different from one another?
What will be an ideal response?
Drug testing may include samples of all of the following EXCEPT:
a. blood b. saliva c. hair d. fingernails
Define advertising. Explain the two types of advertising?
What will be an ideal response?
In terms of management levels, managers who make short-term operating decisions and direct the tasks of nonmanagerial personnel are called _______ managers.
a. top b. first-line c. nonsupervisory d. middle