Northwest Rail wants to raise $27.8 million through a rights offering to upgrade its rail lines. How many shares of stock need to be sold if the current market price is $30.34 a share and the subscription price is $26.50 a share?

Question

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To raise $27.8 million at a subscription price of $26.50 per share, the number of shares needed is calculated by dividing the total amount needed ($27.8 million) by the subscription price per share ($26.50). This gives $27,800,000 / $26.50 = 1,049,056.6. Since you can't sell a fraction of a share, it rounds to 1,049,057 shares.

Northwest Rail Wants to Raise $27