Amy currently owns 15 percent of Aloft, Inc. The company has a total of 125,000 shares outstanding with a current market price of $20 a share. At present, the ﬁrm is offering an additional 12,500
Shares at a price of $17.50 a share. Amy decides not to participate in this offering. What will Amy's
Ownership position be after the offering is completed?

Question

Quizplus · Accepted Answer

Before the offering, Amy owned 15% of 125,000 shares which equals 18,750 shares. After the offering, there will be a total of 137,500 shares outstanding (125,000 + 12,500). Assuming all of the new shares are sold, Amy's ownership position will remain at 18,750 shares, but this will now only represent 13.64% of the total shares outstanding (18,750 divided by 137,500).

Amy Currently Owns 15 Percent of Aloft, Inc