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A company currently has 139k shares outstanding, selling at $58 per share. The firm intends to raise $612k through a rights offering. Management suggests that
A company currently has 139k shares outstanding, selling at $58 per share. The firm intends to raise $612k through a rights offering. Management suggests that a discount cannot fall below 14% as outlined in the previous issue, to which existing shareholders did not respond with much enthusiasm. They believe that a 36% discount offer is more appropriate. Also, the CEO is rejecting calls for raising capital through debt or preferred stock. Net earnings after taxes (EAT) are $692k. Furthermore, a recent corruption scandal involving a number of senior figures in the firm has come to light in the press; soon after the rights offering was announced in other words, it was already too late. Among the immediate consequences were a fall in stock price by 19.62% and increased capital requirements by 62%. Required: In percentage terms, determine by how much did the dollar value of one right change before and after the consequences described above together with the 36% discount offer which was simultaneously taking place. % Do not round intermediate calculations. Input your answer as a percent rounded to 2 decimal places (for example: 28.31%). Note: The term "K" is used to represent thousands (x $1,000)
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