1. Prahm Corp. wants to raise $5.2 million via a rights offering. The company currently has 640,000 shares of common stock outstanding that sell for $59 per share. Its underwriter has set a subscription price of $22 per share and will charge the company a spread of 5 percent.

If you currently own 7,000 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.)

2. The Metallica Heavy Metal Mining (MHMM) Corporation wants to diversify its operations. Some recent financial information for the company is shown here:

Stock price	$	67
Number of shares		35,000
Total assets	$	8,100,000
Total liabilities	$	4,900,000
Net income	$	750,000

MHMM is considering an investment that has the same PE ratio as the firm. The cost of the investment is $850,000, and it will be financed with a new equity issue. The return on the investment will equal MHMMs current ROE.

a.	What is the current book value per share? The new book value per share? (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.)
b.	What is the current EPS? The new EPS? (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.)
c.	What is the current market-to-book ratio? The new market-to-book ratio? (Do not round intermediate calculations and round your answers to 4 decimal places, e.g., .1616.)
d.	What is the NPV of this investment? (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and round your answer to the nearest whole dollar amount, e.g., 32.)

Does accounting dilution occur here?

Does market value dilution occur here?