The Holyoke Corporation has 120,000 shares outstanding with a current market price of €8.10 per share.The company needs to raise an additional €36,000 to ﬁnance new expenditures, and has decided on a rights issue.The issue will allow current shareholders to purchase one additional share for 20 rights at a subscription price of €6 per share. Suppose that the company was also considering structuring the rights issue to allow for an additional share to be purchased for 10 rights at a subscription price of €3.Prove that a shareholder with 100 shares would be indifferent between purchasing a new share for 10 rights at €3 or purchasing a new share for 20 rights at €6.

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The Answer of The Holyoke Corporation has 120,000 shares outstanding with a current market price of €8.10 per share.The company needs to raise an additional €36,000 to ﬁnance new expenditures, and has decided on a rights issue.The issue will allow current shareholders to purchase one additional share for 20 rights at a subscription price of €6 per share. Suppose that the company was also considering structuring the rights issue to allow for an additional share to be purchased for 10 rights at a subscription price of €3.Prove that a shareholder with 100 shares would be indifferent between purchasing a new share for 10 rights at €3 or purchasing a new share for 20 rights at €6.

The Holyoke Corporation Has 120,000 Shares Outstanding with a Current