Loose Leaf for Foundations of Financial Management Format: Loose-leaf
17th Edition
ISBN: 9781260464924
Author: BLOCK
Publisher: Mcgraw Hill Publishers
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Textbook Question
Chapter 17, Problem 12P
Boles Bottling Co. has issued rights to its shareholders. The subscription price is
a. What would be the value of one right?
b. If the stock goes ex-rights, what would the new stock price be?
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Boles Bottling Co. has issued rights to its shareholders. The subscription price is $74 and seven rights are needed along with the subscription price to buy one of the new shares. The stock is selling for $96 rights-on.
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a. What would be the value of one right?
 (Do not round intermediate calculations and round your answer to 2 decimal places.)
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b. If the stock goes ex-rights, what would the new stock price be?
 (Do not round intermediate calculations and round your answer to 2 decimal places.)
Toronto Corporation wants to raise $1,210,000 via a rights offering. The company currently has 220,000 shares of common stock outstanding that sells for $32 per share. The issue will allow current stockholders to purchase one additional share for 5 rights.
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a) What will be the ex-rights stock price, the value of a right, and the appropriate subscription price?
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b) If 2 rights are needed to purchase on additional share, how does the stockholders’ wealth change?
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c) Why do you think the company chose a rights issue rather than a general cash offer to raise new capital?
The Windsor Corporation has 120,000 shares outstanding with a current market price of $8.10 per share. The company needs to raise an additional $36,000 to finance new expenditures and has decided on a rights issue. The issue will allow current stockholders to purchase one additional share for 20 rights at a subscription price of $6 per share.
How many new shares must be issued?
What will be the ex-rights stock price?
If the ex-rights price were set at $7.90, would you as a potential new stockholder choose to buy shares ex-rights or buy shares at the old price and exercise your rights?
Chapter 17 Solutions
Loose Leaf for Foundations of Financial Management Format: Loose-leaf
Ch. 17 - Prob. 1DQCh. 17 - Prob. 2DQCh. 17 - Prob. 3DQCh. 17 - Prob. 4DQCh. 17 - Prob. 5DQCh. 17 - Prob. 6DQCh. 17 - Prob. 7DQCh. 17 - Prob. 8DQCh. 17 - Prob. 9DQCh. 17 - Why is the cumulative feature of preferred stock...
Ch. 17 - A small amount of preferred stock is...Ch. 17 - Prob. 12DQCh. 17 - Prob. 13DQCh. 17 - Prob. 1PCh. 17 - Time Watch Co. has 46 million in earnings and is...Ch. 17 - Prob. 3PCh. 17 - Prob. 4PCh. 17 - Prob. 5PCh. 17 - Prob. 6PCh. 17 - Prob. 7PCh. 17 - Prob. 8PCh. 17 - Prob. 9PCh. 17 - Prob. 10PCh. 17 - Prob. 11PCh. 17 - Boles Bottling Co. has issued rights to its...Ch. 17 - Prob. 13PCh. 17 - Prob. 14PCh. 17 - Prob. 15PCh. 17 - Prob. 16PCh. 17 - Prob. 17PCh. 17 - Prob. 18PCh. 17 - Prob. 19PCh. 17 - Prob. 20PCh. 17 - The treasurer of Kelly Bottling Company (a...Ch. 17 - Prob. 22PCh. 17 - Scroll down and write down the following: a....
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