Wheat Growers, Inc. wants to raise $27 million through a rights offering so they can purchase additional acreage to enhance their growing capacity. How many shares of stock will the firm need to sell through this offering if the current market price is $43 a share and the subscription price is $35 a share?

Question

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To calculate the number of shares needed to be sold in a rights offering, divide the total amount of money needed ($27 million) by the subscription price per share ($35). $27,000,000 / $35 = 771,429 shares.