Chambers Industries has a market capitalization of $800 million and 250 million shares outstanding. The management of this firm plans to raise further capital through a rights issue. Which of the following rights schemes will raise the most money, if all shareholders exercise their rights?

Question

Quizplus · Accepted Answer

A) Money raised = (250 / 2) × 1 million shares × $1.60 = $200 million
B) Money raised = (250 / 3) × 2 million shares × $1.80 = $300 million
C) Money raised = (250 / 4) × 3 million shares × $2.00 = $375 million
D) Money raised = (250 / 5) × 2 million shares × $1.50 = $150 million

Chambers Industries Has a Market Capitalization of $800 Million and 250