Question
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.
| 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 $40 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 | $
|
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Case Studies in Finance Managing for Corporate Value Creation
Authors: Robert F. Bruner, Kenneth Eades, Michael Schill
7th edition
007786171X, 77861711, 978-0077861711
