Tangible Technologies has a market capitalization of $150 million and 8 million shares outstanding.In order to finance its growth,the firm's management plans to raise further capital through a rights issue.All shareholders will be issued one right per share.For every 4 rights held by a stockholder,they can purchase one share at a price of $15 per share.How much money will this raise,if all shareholders exercise their rights?

Question

Quizplus · Accepted Answer

The company has 8 million shares outstanding, and each shareholder gets one right per share. For every 4 rights, a shareholder can purchase 1 new share. Therefore, 8 million / 4 = 2 million new shares can be issued. At $15 per share, the company will raise 2 million * $15 = $30 million.

Tangible Technologies Has a Market Capitalization of $150 Million and 8