Q3. 25 marks The Pitt-Panther Corporation has announced a rights offering to obtain $10 million of equity financing for a new project. The stock currently sells for $80 per share; there are 2 million shares outstanding If Pitt-Panther sets the subscription price at $20 per share, how many shares must be sold? How many rights are required in order to buy one share? What is the ex-rights price? What is the value of a right? Suppose you own 100 shares, but intend to sell the rights, instead of exercising the rights and buy new shares. Is this a good decision? What if you decide to exercise your rights, does this affect your total value? If the rights are trading at $10 per right, how will this affect you if you own 100 shares and what would you recommend to someone who does not own shares? How about if they trade at $13 per right? What would be the minimum current share price (including the right) for you to be interested in buying rights at $13 each? Pin = Price including rights Pex = Price excluding rights