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2. High Potential Electronics Corporation believes that its stock is overvalued by the market only 60. There are shares are selling at $80, although management
2. High Potential Electronics Corporation believes that its stock is overvalued by the market only 60. There are shares are selling at $80, although management believes they are worth onlyS currently 1.2 million shares outstanding, company plans to raise $7.5 million by issuing a further 100,000 shares at $75 each. The existing shareholders can sell their rights to subscribe to this issue for $461,500. If they do so and all the new shares are taken up by new investors, how much will the original shareholders have benefited (a) if the shares were worth only $60 before, and (b) if they were worth $80?
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