Stamford currently has 5 million shares outstanding with a market price of $10 each. Stamford is currently
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Question:
Stamford currently has 5 million shares outstanding with a market price of $10 each. Stamford is currently considering a new project which will have a positive NPV and will increase the market capitalization of the company. To finance the new project the corporation needs to raise an additional $9 million.
Stamford Corporation is very keen to issue rights to its existing shareholders. If the corporation goes for the rights issue, the subscription price will be $9 per share. Assuming the 100% take-up rate, what is the share price of ex-rights
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