d'Anconia Copper is an all-equity firm with 60 million shares outstanding, which are currently trading at $20 per share. Last month, d'Anco 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. 9. nia announced that it will change its capital What is the market capitalization of d'Anconia Copper before and after this transaction takes place? At the conclusion of this transaction, what is the number of shares that d'Anconia Copper will have outstanding? Suppose you are a shareholder in d'Anconia Copper holding 300 shares, and you disagree with the decision to lever the firm. What is the home leverage strategy to undo the effect of this decision? a. b. c. uC
