A.K.Stevenson wants to raise $7.5 million through a rights offering.The subscription price is set at $24.Currently,the company has 2.1 million shares outstanding with a current market price of $25 a share.Each shareholder will receive one right for each share of stock they currently own.How many rights will be needed to purchase one new share of stock in this offering?

Question

Quizplus · Accepted Answer

Number of rights issued = 1 × 2.1m = 2.1m; Number of shares needed = $7.5m/$24 = 312,500; Rights needed for each new share = 2.1m/312,500 = 6.72 rights

AKStevenson Wants to Raise $7