[LO4] Red Shoe Co. has concluded that 3. Rights additional equity financing will be needed to expand operations and that the needed funds will be best obtained through a rights offering. It has correctly determined that as a result of the rights offering, the share price will fall from $49 to $47.60 ($49 is the rights-on price; $47.60 is the ex- rights price, also known as the when-issued price). The company is seeking $16.5 million in additional funds with a per-share subscription price equal to $34. How many shares are there currently, before the offering? (Assume that the increment to the market value of the equity equals the gros proceeds from the offering.)

[LO4] Red Shoe Co. has concluded that 3. Rights additional equity financing will be needed to expand operations and that the needed funds will be best obtained through a rights offering. It has correctly determined that as a result of the rights offering, the share price will fall from $49 to $47.60 ($49 is the rights-on price; $47.60 is the ex- rights price, also known as the when-issued price). The company is seeking $16.5 million in additional funds with a per-share subscription price equal to $34. How many shares are there currently, before the offering? (Assume that the increment to the market value of the equity equals the gros proceeds from the offering.)

Entrepreneurial Finance

6th Edition

ISBN:9781337635653

Author:Leach

Publisher:Leach

Chapter8: Securities Law Considerations When Obtaining Venture Financing

Section: Chapter Questions

Problem 1gM

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