Inventory Systems, Mitsi Inventory Systems, Inc., has

Inventory Systems

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Reference no: EM13880006

Mitsi Inventory Systems, Inc., has announced a rights offer. The company has announced that it will take five rights to buy a new share in the offering at a subscription price of $25. At the close of business the day before the ex-rights day, the company’s stock sells for $55 per share. The next morning, you notice that the stock sells for $45 per share and the rights sell for $3 each.

A) What price should the stock sell for ex-rights? (Do not round intermediate calculations and round your answer to 2 decimal places. (e.g., 32.16)

B) What is the amount of instant profit you can make on ex rights day per new share? (Do not round intermediate calculations.)

Reference no: EM13880006

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