15-3)

Associated Breweries is planning to market unleaded beer. To finance the venture, it proposes to make a rights issue with a subscription price of $10. One new share can be purchased for every two shares held. The company currently has outstanding 160,000 shares priced at $70 a share. Assuming that the new money is invested to earn a fair return, give values for the following:

a.Number of new shares.

Number of new shares

b.Amount of new investment.

New investment$

c.Total value of company after issue.

Value of company$

d.Total number of shares after issue.

Total number of shares

e.Share price after the issue.

Share price after issue$