The Clifford Corporation has announced a rights offer to raise $25 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 $48 per share, and there are 2.7 million shares outstanding.

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

b. If the subscription price is set at $41 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.