PU Ltd contemplates raising $2,000,000 through rights offering. The subscription price is $25 per share. The company
Fantastic news! We've Found the answer you've been seeking!
Question:
PU Ltd contemplates raising $2,000,000 through rights offering. The subscription price is $25 per share. The company has 320,000 shares outstanding. The stock is currently trading at $30 per share.
(a) Calculate the number of rights necessary to buy one new share of stock. (Show your calculations).
(b) Calculate the ex-rights stock price and the value of a right. (Show your calculations).
(c) Briefly explain what you should do if the price of a right is lower than that from part (b).
Related Book For
Intermediate Accounting Volume 2
ISBN: 9781260881240
8th Edition
Authors: Thomas H. Beechy, Joan E. Conrod, Elizabeth Farrell, Ingrid McLeod-Dick, Kayla Tomulka, Romi-Lee Sevel
Posted Date: