A South African group needs to raise $4 million to pay for its diamonds in the near future.It will raise the funds by offering rights of 400,000 each, and which entitles the owner to buy one new share.The company currently has one million shares outstanding priced at $40 each.What must be the subscription price on the rights the company plans to offer?

Question

Quizplus · Accepted Answer

The Answer of A South African group needs to raise $4 million to pay for its diamonds in the near future.It will raise the funds by offering rights of 400,000 each, and which entitles the owner to buy one new share.The company currently has one million shares outstanding priced at $40 each.What must be the subscription price on the rights the company plans to offer?

A South African Group Needs to Raise $4 Million to Pay