Diamond Drill Inc. has 150,000 shares and 15,000 warrants outstanding. A warrant holder can purchase a new share of stock for five warrants and $5.00 per warrant. The stock is currently selling for $27 per share. If the warrants are all exercised immediately,what would be the market price of the stock?

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When all warrants are exercised, 15,000 warrants will convert into 3,000 new shares (15,000/5). The company will receive $75,000 (15,000 * $5). The new total number of shares will be 153,000 (150,000 + 3,000). The total market value before exercise is $4,050,000 (150,000 * $27). After exercise, the total market value is $4,125,000 ($4,050,000 + $75,000). The new market price per share is $26.96 ($4,125,000 / 153,000).