Jones Men's Wear would like to expand the ﬁrm's operations but needs $3.5 million in additional funding. It has opted to raise the necessary funds through a rights offering at a subscription price of
$27)50 a share. The current market price of their stock is $34 a share. How many shares of stock
Will the ﬁrm need to sell through the rights offering to fund the expansion?

Question

Quizplus · Accepted Answer

To calculate the number of shares Jones Men's Wear needs to sell, we need to use the formula:
Number of shares to sell = Funds needed / subscription price per share

In this case, the funds needed are $3.5 million, and the subscription price per share is $27.50. Thus,
Number of shares to sell = 3,500,000 / 27.50 = 127,273

Therefore Jones Men's Wear needs to sell 127,273 shares through the rights offering to fund the expansion. The correct answer is D.

Jones Men's Wear Would Like to Expand the ﬁRm's Operations