A Corporation wants to raise $1,210,000 via a rights offering. The company currently has 220,000 shares of common stock outstanding that sells for $32 per share. The issue will allow current stockholders to purchase one additional share for 5 rights. 

1. What will be the ex-rights stock price, the value of a right, and the appropriate subscription price?
2. If 2 rights are needed to purchase on additional share, how does the stockholders' wealth change?
3. Why do you think the company chose a rights issue rather than a general cash offer to raise new capital?

Answer rating: 100% (QA)

To calculate the exrights stock price value of a right and the appropriate subscription price well follow these steps 1 Calculate the number of rights ... View the full answer