Question 1: Armley Airline Connection Inc., is proposing a rights offering. Currently, there are 435,000 shares outstanding with a market price of $71 per stock. The company is offering 50,000 new shares at a price of $64 each. a. What is the new market value of the company? b. How many rights are associated with one of the new shares? c. What is the ex-rights price? d. What is the value of a right? e. Why might a company have a rights offering rather than a general cash offer?

Question 2: Discuss the advantages and disadvantages of paying dividends.