Loose Leaf for Corporate Finance (Mcgraw-hill/Irwin Series in Finance, Insurance, and Real Estate)
11th Edition
ISBN: 9781259709685
Author: Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe
Publisher: McGraw-Hill Education
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Question
Chapter 20, Problem 17QP
Summary Introduction
To determine: The proceeds from selling rights.
Rights Offer:
The rights offer is the offer in which common stock is issued to the existing shareholders. In this offer, the shareholder has issued an option in which a certain number of shares can be bought at a specific price and at specific duration.
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Nougat Corporation wants to raise $4.9 million via a rights offering. The company currently has 550,000 shares of common stock outstanding that sell for $50 per share. Its underwriter has set a subscription price of $25 per share and will charge the company a spread of 5 percent. If you currently own 3,000 shares of stock in the company and decide not to participate in the rights offering, how much money can you get by selling your rights? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
I keep getting the wrong answer, I get $2,430 and its not correct, the answer 20130 is also not correct.
Nougat Corporation wants to raise $5.2 million via a rights offering. The company currently has 580,000 shares of common stock outstanding that sell for $53 per share. Its underwriter has set a subscription price of $28 per share and will charge the company a spread of 5 percent. If you currently own 6,000 shares of stock in the company and decide not to participate in the rights offering, how much money can you get by selling your rights?
Nougat Corporation wants to raise $4.9 million via a rights offering. The company currently has 550,000 shares of common stock outstanding that sell for $50 per share. Its underwriter has set a subscription price of $25 per share and will charge the company a spread of 5 percent. If you currently own 3,000 shares of stock in the company and decide not to participate in the rights offering, how much money can you get by selling your rights? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
I keep getting the wrong answer, I get $2,430 and its not correct
Chapter 20 Solutions
Loose Leaf for Corporate Finance (Mcgraw-hill/Irwin Series in Finance, Insurance, and Real Estate)
Ch. 20 - Prob. 1CQCh. 20 - Debt versus Equity Flotation Costs Why arc the...Ch. 20 - Prob. 3CQCh. 20 - Prob. 4CQCh. 20 - Prob. 5CQCh. 20 - Prob. 6CQCh. 20 - Prob. 7CQCh. 20 - Prob. 8CQCh. 20 - Prob. 9CQCh. 20 - IPO Pricing The following material represents the...
Ch. 20 - Competitive and Negotiated Offers What are the...Ch. 20 - Seasoned Equity Offers What are the possible...Ch. 20 - Prob. 13CQCh. 20 - Prob. 14CQCh. 20 - Prob. 15CQCh. 20 - Rights Offerings Chanelle, Inc., is proposing a...Ch. 20 - Prob. 2QPCh. 20 - Prob. 3QPCh. 20 - Prob. 4QPCh. 20 - Calculating Flotation Costs The St. Anger...Ch. 20 - Prob. 6QPCh. 20 - Calculating Flotation Costs The Green Hills Co....Ch. 20 - Prob. 8QPCh. 20 - Stock Offerings The Newton Company has 50,000...Ch. 20 - Dilution Teardrop, Inc., wishes to expand its...Ch. 20 - Dilution The all-equity firm Metallica Heavy Metal...Ch. 20 - Prob. 12QPCh. 20 - Prob. 13QPCh. 20 - Prob. 14QPCh. 20 - Prob. 15QPCh. 20 - Prob. 16QPCh. 20 - Prob. 17QPCh. 20 - Prob. 18QPCh. 20 - Prob. 1MCCh. 20 - Prob. 2MCCh. 20 - Prob. 3MCCh. 20 - Prob. 4MC
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- Nougat Corporation wants to raise $4.9 million via a rights offering. The company currently has 550,000 shares of common stock outstanding that sell for $50 per share. Its underwriter has set a subscription price of $25 per share and will charge the company a spread of 5 percent. If you currently own 3,000 shares of stock in the company and decide not to participate in the rights offering, how much money can you get by selling your rights? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) I keep getting the wrong answer, I get $2,430 and its not correct, the answer 20130 is also not correct, and the answer 20459.29 is also not correctarrow_forwardWuttke Corp. wants to raise $4.5 million via a rights offering. The company currently has 550,000 shares of common stock outstanding that sell for $80 per share. Its underwriter has set a subscription price of $40 per share and will charge the company a spread of 4 percent. If you currently own 2,500 shares of stock in the company and decide not to participate in the rights offering, how much money can you get by selling your rights? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) Sale proceedsarrow_forwardPrahm Corp. wants to raise $4.7 million via a rights offering. The company currently has 530,000 shares of common stock outstanding that sell for $55 per share. Its underwriter has set a subscription price of $30 per share and will charge the company a spread of 6 percent. If you currently own 5,000 shares of stock in the company and decide not to participate in the rights offering, how much money can you get by selling your rights? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) Sale proceedsarrow_forward
- Prahm Corporation wants to raise $3.9 million via a rights offering. The company currently has 470,000 shares of common stock outstanding that sell for $35 per share. Its underwriter has set a subscription price of $23 per share and will charge the company a 5 percent spread. If you currently own 6,650 shares of stock in the company and decide not to participate in the rights offering, how much money can you get by selling your rights?arrow_forwardFarah’s Fine Fashions (FFF) is considering raising money through a rights offering. FFF currently has 10 million shares outstanding selling for $22 per share. Current shareholders will receive one right per share. Four rights are required to buy one share for $20. Will the rights be exercised and if so, how much money will FFF raise if all rights are exercised? Select one: a. The rights will not be exercised. b. $4 million c. $40 million d. $50 million e. None of the above.arrow_forwardNougat Corporation wants to raise $4 million via a rights offering. The company currently has 460,000 shares of common stock outstanding that sell for $41 per share. Its underwriter has set a subscription price of $16 per share and will charge the company a spread of 6 percent. If you currently own 4,000 shares of stock in the company and decide not to participate in the rights offering, how much money can you get by selling your rights? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) Your proceeds from sale of rightsarrow_forward
- Please answer this question step by step: * Prahm Corp. wants to raise $3.9 million via a rights offering. The company currently has 450,000 shares of common stock outstanding that sell for $40 per share. Its underwriter has set a subscription price of $15 per share and will charge the company a spread of 5 percent. If you currently own 3,000 shares of stock in the company and decide not to participate in the rights offering, how much money can you get by selling your rights?arrow_forwardFarah’s Fine Fashions (FFF) is considering raising money through a rights offering. FFF currently has 10 million shares outstanding selling for $22 per share. Current shareholders will receive one right per share. Five rights are required to buy one share for $20. Will the rights be exercised and if so, what is FFF’s new market value if all rights are exercised? Select one: a. The rights will not be exercised. b. $220 million c. $260 million d. $321 million e. None of the above.arrow_forwardA firm wants to raise $40 million through a rights offering. The subscription price is set at $40. Currently, the company has 3 million shares outstanding with a current market price of $50 a share. Each shareholder will receive one right for each share of stock they currently own. How many rights will be needed to purchase one new share of stock in this offering? 4 6.arrow_forward
- Lufuego Corporation has issued rights to its shareholders. The stock is selling for $26 rights-on and has a subscription price of $20. The company hopes to raise $1,000,000 to buy a new production facility. All 200,000 shareholders will receive one right each as part of the rights offering. What is the current value of the right? $1.50 b. There is not enough information to answer this question. c. $1.20 d. $.97arrow_forwardToronto 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. a) What will be the ex-rights stock price, the value of a right, and the appropriate subscription price? b) If 2 rights are needed to purchase on additional share, how does the stockholders’ wealth change? c) Why do you think the company chose a rights issue rather than a general cash offer to raise new capital?arrow_forwardHoobastink Mfg. is considering a rights offer. The company has determined that the ex- rights price will be $61. The current price is $68 per share, and there are 10 million shares outstanding. The rights offer would raise a total of $60 million. What is the subscription price?arrow_forward
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