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, 3,000 new shares are issued (15,000 warrants / 5 warrants per share). The company receives $75,000 (15,000 warrants * $5). The new total shares are 153,000 (150,000 + 3,000). The new market capitalization is $4,125,000 (150,000 shares * $27 + $75,000). The new stock price is $26.96 ($4,125,000 / 153,000 shares).