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Mr. and Mrs. Anderson own five shares of Magic Tricks Corporation's common stock. The market value of the stock is $76. The Andersons also have

Mr. and Mrs. Anderson own five shares of Magic Tricks Corporation's common stock. The market value of the stock is $76. The Andersons also have $58 in cash. They have just received word of a rights offering. One new share of stock can be purchased at $58 for each five shares currently owned (based on five rights).

(Do not round intermediate calculations and round your answers to the nearest whole dollar.)

a.

What is the value of a right?

Value per right $

b. What is the value of the Andersons portfolio before the rights offering? (Portfolio in this question represents stock plus cash.)

Portfolio value $

c-1. Compute the diluted value (ex-rights) per share.

Diluted value $

c-2.

If the Andersons participate in the rights offering, what will be the value of their portfolio, based on the diluted value (ex-rights) of the stock?

Portfolio value $

d.

If they sell their rights but keep their stock at its diluted value and hold on to their cash, what will be the value of their portfolio?

Portfolio value $

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