Determining rights offering

Assignment Help Finance Basics

Reference no: EM1337799

Kristy Fashions, has 4.5 million shares of common stock outstanding. The current market price of common stock is 60 dollars per share rights on, The company net income this year is 18 mil. A right offering has been announced in which 450,000 news shares will be sold at 55 per share. The subscription price of 55 plus 10 right is needed to buy one of the new shares.

A. What are the earnings per share and price-earning ratio before the new shares are sold via the rights offering?

B. What would the price-earning) ratio be immediately after the rights offering? (assuming there is no change in the market value of the stock, expect for the change that occurs when the stock begins trading ex-rights.) Round all answers to two places to the right of the decimal point.

Reference no: EM1337799

Questions Cloud

Cost function of the market requirement : Is cost often a function of the market requirements and can high quality is achieved at any cost point? Why or why not?

Division within roman citizen : What were the major divisions within the body of Roman citizens between 133 and 31 BC?

Litigation-bill of rights-insurance and liability : What amendments to the Bill of Rights have had the most impact on business? What would business life be like without them?

What is coming singularity and exponential technology : what is coming singularity and exponential technology

Determining rights offering : What are the earnings per share and price-earning ratio before new shares are sold via the rights offering?

Daimler benz and chrysler : Daimler-Benz and Chrysler merged in 1997. How might each company have been affected if they had:

As per increases in population and income growth : As per increases in population and income growth that expanded demand for housing, the price of existing houses barely increased. Why. Illustrate answer with supply and demand curves.

Create a table with uneven cell sizes : Trying to make use of a table with uneven cell sizes. I have made the cells and 2 tables which I'm trying to combine into 1 table and then make borders around that table (and around the cells as well).

Situation in which pert estimation technique be used : In what situations should the PERT estimation technique be used?

User Account

All Pages