8

a) Prahm Corp. wants to raise $4 million via a rights offering. The company currently has 460,000 shares of common stock outstanding that sell for $41 per share. Its underwriter has set a subscription price of $16 per share and will charge the company a spread of 6 percent.

If you currently own 4,000 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?

b)The Whistling Straits Corporation needs to raise $70 million to finance its expansion into new markets. The company will sell new shares of equity via a general cash offering to raise the needed funds. The offer price is $30 per share and the company's underwriters charge a spread of 8 percent. If the SEC filing fee and associated administrative expenses of the offering are $575,000, how many shares need to be sold? (Do not round intermediate calculations and enter your answer in dollars, not millions, rounded to the nearest whole number, e.g., 1,234,567.)