How much are each of those rights worth

Reference no: EM13271664

A firm currently has 20,000,000 shares with a price of $25 per share. They want to issue another 1,000,000 shares so they give each shareholder the right to buy .05 shares of new stock for $1 (it will take twenty rights to buy one new share for $20). How much are each of those rights worth?
a) $0.24 b) $1.11 c) $2.01 d) $3.80

Reference no: EM13271664

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