Question
1. The market price of the common stock of PQR Inc. is $70 per share. There are 2,000 shares outstanding. PQR is considering a preemptive
1. The market price of the common stock of PQR Inc. is $70 per share. There are 2,000 shares outstanding. PQR is considering a preemptive rights offering. Each current shareholder will get one right for every two shares owned. With each right and a $40 payment a new share can be purchased. Assume all the rights are exercised. What will be the market cap of PQR after the exercise of the preemptive rights?
2. The market price of the common stock of PQR Inc. is $70 per share. There are 2,000 shares outstanding. PQR is considering a preemptive rights offering. Each current shareholder will get one right for every two shares owned. With each right and a $40 payment a new share can be purchased. Assume all the rights are exercised. What will be the price per share of PQR after the exercise of the preemptive rights?
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