The Clifford Corporation has announced a rights offer to raise $30 million for a new journal, the Journal of Financial Excess. This journal will review potential articles after the author pays a nonrefundable reviewing fee of $3,000 per page. The stock currently sells for $40 per share, and there are 3.6 million shares outstanding.

a.

1. What is the maximum possible subscription price?

2. What is the minimum?

b. If the subscription price is set at $32 per share, how many shares must be sold?

How many rights will it take to buy one share?

c. What is the ex-rights price?

What is the value of a right? (

d. A shareholder with 2,000 shares before the offering has no desire (or money) to buy additional shares offered as rights. What is his portfolio value before and after the rights offer?

Portfolio value before rights=

Portfolio value after rights=