Problem:
Again, Inc. is proposing a rights offering. Presently, there are 490,000 shares outstanding at $75 each. There will be 80,000 new shares offered at $71 each.
Required:
Question 1: What is the new market value of the company?
Question 2: How many rights are associated with one of the new shares?
Question 3: What is the ex-rights price?
Question 4: What is the value of a right?
Points up in detail clarify all workings.