o A company wants to raise $20 million. The subscription price is $40, and the current stock price is $50. The firm currently has 5,000,000 shares outstanding. How many shares must be issued? Shares issued = amount raised/subscription price How many rights will it take to purchase one share? Rights to buy one share = old shares/ new shares What is the value of a right? Total Investment =(current price x rights to buy one share + subscription price) Ex-rights price = (Total investment) (rights to buy one share +1) Value of a right = current stock price - ex rights