Equity financing will be needed to expand operations

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Reference no: EM131458751

Red Shoe Co. has concluded that additional equity financing will be needed to expand operations and that the needed funds will be best obtained through a rights offering. It has correctly determined that as a result of the rights offering, the share price will fall from $60 to $42 ($60 is the rights-on price; $42 is the ex-rights price,also known as the when-issued price). The company is seeking $10 million in additional funds with a per-share subscription price equal to $30. How many shares are there currently, before the offering? (Assume that the increment to the market value of the equity equals the gross proceeds from the offering.) rev: 09_20_2012 A. 231,111 B. 385,397 C. 222,222 D. 233,333 E. 213,333

Reference no: EM131458751

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