Problem:
Rights. Associated Breweries is planning to market unleaded beer. To finance the venture, it proposes to make a rights issue with a subscription price of $10. One new share can be purchased for each two shares held. The company currently has outstanding 100,000 shares priced at $40 a share. Assuming that the new money is invested to earn a fair return, give values for the following:
a. number of new shares
b. amount of new investment
c. total value of company after issue
d. total number of shares after issue
e. share price after the issue