Question

Stone Shoe Co. has concluded that additional equity financing will be needed to expand operations and that the needed funds will be best obtained through a rights offering. It has correctly determined that as a result of the rights offering, the share price will fall from $65 to $63.18 ($65 is the “rights-on” price; $63.18 is the ex-rights price, also known as the when-issued price). The company is seeking $15 million in additional funds with a per-share subscription price equal to $50. How many shares are there currently, before the offering? (Assume that the increment to the market value of the equity equals the gross proceeds from the offering.)



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  • CreatedAugust 28, 2014
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