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Mullan has 5 million shares outstanding and its shares currently sells for 20 per share. Mullan has announced a right issue to raise 30 million.
Mullan has 5 million shares outstanding and its shares currently sells for 20 per share. Mullan has announced a right issue to raise 30 million. The subscription price is set at 15 per share.
- Calculate the ex-rights price and the value of a right?
- Calculate the portfolio value of a shareholder with 500 shares after the right offer, if;
- The shareholder sells its right in the market
ii. The shareholder lets its rights to expire.
c) Comment on the values you have calculated in part (b).
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