Electrical Services, Inc. would like to expand its operations and would require $2 million in additional funding to do this. After discussing this with shareholders, Electrical Services has decided to raise the necessary funds through a rights offering with a subscription price of $24 a share. The current market price of their stock is $30 a share. How many shares of stock will Electrical Services need to sell through the rights offering to fund the expansion plans?

Question

Quizplus · Accepted Answer

To raise $2 million at a subscription price of $24 per share, Electrical Services needs to sell 2,000,000 / 24 = 83,333 shares.