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How many new shares are to be sold

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The Rising Sun Ltd currently has 75 million shares outstanding. The shares sell for $6 per share. To raise $100 million for a new plant, the firm is considering a rights offering at $4 per share.

Problem 1: Discuss TWO advantages of rights issue.

Problem 2: How many new shares are to be sold? How many shares are to be held in order to get one new share? Compute the value of a right and also the value of an ex-rights share.

Reference no: EM132563957

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