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, the firm needs to sell $4,000,000/$30 = 133,333 shares through the rights offering.

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