Capstone Co. has $10 million shares outstanding trading at $50 per share. Capstone Co. is thinking of
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Question:
Capstone Co. has $10 million shares outstanding trading at $50 per share. Capstone Co. is thinking of buying BigAL, which has 5 million shares outstanding, at a price of $25 per share. Capstone will pay for BigAl by issuing new shares. There are no expected synergies from the transaction. If Capstone pays no premium to buy BigAl, the the number of shares Capstone needs to issue too fund this deal will be closest to :
a. 0
b. 2.5 million
c. 3 million
d. 5 million
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