The Wordsmith Corporation has 10,000 shares outstanding at $30 each. They expect to raise $150,000 by a rights offering with a subscription price of $25 how many rights must you turn in to get a new share?

Question

Quizplus · Accepted Answer

To find out how many rights are needed to purchase a new share, first, calculate the number of new shares to be issued using the total amount to be raised and the subscription price per share: $150,000 / $25 = 6,000 shares. Then, divide the total number of old shares by the new shares to be issued: 10,000 / 6,000 = 1.67. This means 1.67 rights are needed to buy one new share.

The Wordsmith Corporation Has 10,000 Shares Outstanding at $30 Each