You would like to expand your firm's operations into a neighboring province but you need $4 million in additional funding to do this. After talking with your key shareholders, you decide to raise the necessary funds through a rights offering with a subscription price of $30 a share. The current market price of your stock is $38 a share. How many shares of stock will you need to sell through the rights offering to fund your expansion plans?

Question

Quizplus · Accepted Answer

To raise $4 million at a subscription price of $30 a share, you divide the total amount needed ($4,000,000) by the subscription price per share ($30). This gives you 133,333 shares (4,000,000 / 30 = 133,333.33, rounded to the nearest whole number).

You Would Like to Expand Your Firm's Operations into a Neighboring