How many original shares and how many new shares have

Assignment Help Financial Management

Reference no: EM132001908

Suppose you own 60,000 shares of common stock in a firm with 3 million total shares outstanding. The firm announces a plan to sell an additional 1.2 million shares through a rights offering. The market value of the stock is $35 before the rights offering and the new shares are being offered to existing shareholders at a $5 discount.

a. If you exercise your preemptive rights, how many of the new shares can you purchase?

New shares

b. What is the market value of the stock after the rights offering? (Enter your answer in millions rounded to 1 decimal place. (e.g., 32.1))

Market value $ million

c-1. What is your total investment in the firm after the rights offering? (Do not round intermediate calculations. Enter your answer in millions rounded to 2 decimal places. (e.g., 32.16))

Total investment $ million

c-2. If you exercise your preemptive right how many original shares and how many new shares do you have?

Original shares
New shares

d-1. If you decide not to exercise your preemptive rights, what is your investment in the firm after the rights offering? (Do not round intermediate calculations. Enter your answer in millions rounded to 3 decimal places. (e.g., 32.161))

Investment $ million

d-2. If you sell your rights rather than use them, how much money will you receive from the rights sale and what is the total value of your proceeds from the sale of the rights offering plus your investment in the firm? (Enter your answer in millions rounded to 3 decimal places. (e.g., 32.161))

Sale of rights $ million
Total investment $ million

Reference no: EM132001908

Questions Cloud

Types of memory do think is the most important : List a few examples of each, taken from your daily life. Which of these types of memory do think is the most important? the least important?

What is the present value of the bond : Suppose a bond makes $60 coupon payments at the end of the next two years, at which time the value of $1,000 is repaid.

Amount of violence shown on television : Given knowledge about modeling, why people favor the passage of laws that will control the amount of violence shown on television.

Dreaming results from random neural activity : Yet many people dream of flying, falling, or being unprepared for a test. How do people have similar dreams if dreaming results from random neural activity?

How many original shares and how many new shares have : If you exercise your preemptive right how many original shares and how many new shares do you have?

What price would you be willing to pay for a share of acap : What price would you be willing to pay for a share of Acap stock today, if you planned to hold the stock for two years?

Relationship between integral psychology and education : Give an in-depth account of relationship between Integral Psychology and Education (both from Indian and Western perspective).

What is the minimum amount that you must deposit each : Suppose that you have $40,000 in an account that earns eight percent, compounded monthly.

What effects does consuming chocolate have on cognition : What effects does consuming chocolate have on cognition? Are chocolate consumers cognitively impaired?

User Account

All Pages