Kelly currently owns 20 percent of Peters, Inc. The company has a total of 175,000 shares outstanding with a current market price of $25 a share. At present, the ﬁrm is offering an additional
15,000 shares at a price of $22.50 a share. Kelly decides not to participate in this offering. What will
Kelly's ownership position be after the offering is completed?

Question

Quizplus · Accepted Answer

Initially, Kelly owns 20% of 175,000 shares, which is 35,000 shares. After the offering, the total shares will be 190,000 (175,000 + 15,000). Kelly's ownership will be 35,000/190,000 = 18.42%.

Kelly Currently Owns 20 Percent of Peters, Inc