Question: Please type the answer by computer, so i can see it clearly, thank you!!!! BBA Company has announced a rights offering to raise $1,000,000 in

Please type the answer by computer, so i can see it clearly, thank you!!!!

BBA Company has announced a rights offering to raise $1,000,000 in new shares at a subscription price of $10.05 per share. There are 6,000,000 shares outstanding trading at $11 each.

Question:

1(a) Provide any two reasons why the company might choose a rights offering rather than a general cash offer.

1(b) Identify the ex-rights price and the value of a right.

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