Survivor NV, an all-equity firm, has three shares outstanding. Yesterday, the firm’s assets consisted of 5 ounces of platinum, currently worth €1,000 per ounce. Today, the company issued Ms Wu a warrant for its fair value of €1,000. The warrant gives Ms Wu the right to buy a single share of the firm’s equity for €2,100 and can be exercised only on its expiration date one year from today. The firm used the proceeds from the issuance to immediately purchase an additional ounce of platinum.

(a) What was the price of a single share of equity before the warrant was issued?

(b) What was the price of a single share of equity immediately after the warrant was issued?

(c) Suppose platinum is selling for €1,100 per ounce on the warrant’s expiration date in one year. What will be the value of a single share of equity on the warrant’s expiration date?