Equity financing will be needed to expand operations

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Reference no: EM132073568

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 $55 to $51.00 ($55 is the rights-on price; $51.00 is the ex-rights price, also known as the when-issued price). The company is seeking $23 million in additional funds with a per-share subscription price equal to $40. 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.)

Reference no: EM132073568

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