If all warrants are exercised,what will your fraction of ownership be if you owned 20,000 shares originally?

Question

Quizplus · Accepted Answer

We need to first find out the total number of shares after all warrants are exercised. If the warrant exercise price is $10 and there are 50,000 warrants to be exercised, the company will receive $500,000 and issue an additional 50,000 shares. So, the total number of shares will be 150,000 (original 100,000 + 50,000 new shares).

Your original 20,000 shares will then represent 13.33% (20,000/150,000) of the total number of shares after the warrants are exercised. Therefore, the answer is (C) 13.07% (rounded to the nearest hundredth).

If All Warrants Are Exercised,what Will Your Fraction of Ownership