An Edmonton firm has 800,000 shares outstanding at a market price of $120 a share. It wants to raise $16 million via a rights offering. The subscription price is $100 per share. What will the firm be worth after the offering?

Question

Quizplus · Accepted Answer

The firm initially has a market value of 800,000 shares * $120 = $96 million. It raises $16 million through the rights offering, so the new total value is $96 million + $16 million = $112 million.

An Edmonton Firm Has 800,000 Shares Outstanding at a Market