Rights Offering The Clifford Corporation has announced a rights offer to raise $28 million for a new

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Rights Offering The Clifford Corporation has announced a rights offer to raise

$28 million for a new journal, the Journal of Financial Excess. This journal will review potential articles after the author pays a nonrefundable reviewing fee of

$5,000 per page. The stock currently sells for $27 per share, and there are 2.9 million shares outstanding.

a. What is the maximum possible subscription price? What is the minimum?

b. If the subscription price is set at $25 per share, how many shares must be sold?

How many rights will it take to buy one share?

c. What is the ex-rights price? What is the value of a right?

d. Show how a shareholder with 1,000 shares before the offering and no desire (or money) to buy additional shares is not harmed by the rights offer.

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Related Book For  book-img-for-question

Corporate Finance With Connect Access Card

ISBN: 978-1259672484

10th Edition

Authors: Stephen Ross ,Randolph Westerfield ,Jeffrey Jaffe

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