In 2012, the Pandora Box Company made a rights issue at 12 a share of one new share for every ten shares held. Before the issue there were 10.7 million shares outstanding and the share price was 15. Now suppose that the company had decided to issue the new stock at 11 instead of 12.

How many new shares would the firm have needed to sell to raise the same sum of money?

What would be the new value of the opportunity given to shareholders to buy one new share for less than the market price?

What would be the prospective stock price after the issue?

Now how far could the total value of the company fall before shareholders would be unwilling to take up their rights?