Dr. Doodle wants to raise $18 million through a rights offering. The offering has a subscription price of $9, the current market price is $11, and there are 6 million shares outstanding. How many rights
Are required to purchase one of the new shares?

Question

Quizplus · Accepted Answer

To calculate the number of rights required to purchase one of the new shares, we need to divide the subscription price by the current market price, and then add 1. So the calculation is: (9/11)+1 = 1.818. Therefore, it takes approximately 2 rights to purchase one new share. Rounded up, the answer is 3, so the best choice is B.

Dr Doodle Wants to Raise $18 Million Through a Rights