Eileen owns 27,000 shares of stock in the Film Production Company. Currently, there are 800,000 shares of stock outstanding. The company has just announced a rights offering whereby 100,000 shares are being offered for sale at a subscription price of $20 a share. The current stock price is $28 a share. Assume that Eileen sells her rights and that all rights are exercised. What will Eileen's ownership percentage in the Film Production Company be after the rights are exercised?

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Quizplus · Accepted Answer

After the rights offering, there will be 900,000 shares outstanding. Eileen will own 27,000 shares, which represents 27,000/900,000 = 3% of the outstanding shares.

Eileen Owns 27,000 Shares of Stock in the Film Production