Require stockholders for purchasing share of new stock

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Reference no: EM131863861

Consider the situation faced by the CFO of a company with a market capitalization of $500 Millions of USD, e.g. the firm has 7 million shares outstanding, so the shares are trading at $71.4285714285714 per share. The CFO needs to raise $25 Millions of USDs and announces a rights issue. Each existing shareholder is sent 5 right for every share he or she owns. The CFO has not decided how many rights will be required to purchase a share of new stock. At the current price per share, what is the maximum amount of rights the CFO can require stockholders for purchasing a share of new stock and so be able to raise the $25 Millions of USDs? Note: Express your answers in strictly numerical terms. For example, if the answer is ten shares, enter 10 as an answer."

Reference no: EM131863861

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