Question
AI Graphics Inc. announced they wanted to raise $10,000,000 in new financing through a rights offering, where one right would entitle the shareholder to 0.80
AI Graphics Inc. announced they wanted to raise $10,000,000 in new financing through a rights offering, where one right would entitle the shareholder to 0.80 of a right (not a typo). The firm has 2,000,000 shares outstanding, and the stock is currently selling for $66 rights-on. The subscription price will be $50.00 cash per share.
You own 3,500 shares in AI Graphics stock, and are wondering what to do.
1. What would be the value of one right ex-rights?
2. How many of the new shares could you buy if you exercised all your rights? How much additional cash would you need to exercise your rights?
3. Clearly summarize your options, including the advantages / disadvantages of each. Would one option leave you in a better financial position than the others? (Use proper sentence structure, grammar and spelling.)
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started