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Red Shoe Company has concluded that additional equity financing will be needed to expand operations and that the needed funds will be best obtained through
Red Shoe Company has concluded that additional equity financing will be needed to expand operations and that the needed funds will be best obtained through a rights offering. It has correctly determined that as a result of the rights offering, the share price will fall from $ to $$ is the rightson price; $ is the exrights price,also known as the whenissued price The company is seeking $ million in additional funds with a pershare subscription price equal to $ How many shares are there currently, before the offering? Assume that the increment to the market value of the equity equals the gross proceeds from the offering.Multiple Choice
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