Dilution effect of stock issue


Raggio, INc has 100,000 shares of stock outstanding. Each share is worth $80.00, so the company's market value of equity is $8,000,000. Suppose the firm issues 20,000 new shares at the following prices: $80, $75, and $65. What will the effect be of each of the these alternative offering prices on the existing price per share?

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Finance Basics: Dilution effect of stock issue
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