The detail of a rights offering by Pandora in 2013, Pandora, Inc., makes a rights issue at a subscription price of $5 a share. One new share can be purchased for every 4 shares held. Before the issue there were 10 million shares outstanding, and the share price was $6. Suppose that the company had decided to issue the new stock at $4 instead of $5 a share. How many new shares would it have needed to raise the same sum of money. Show that Pandoras shareholders are just as well off if it issues the shares at $4 a share rather than $5.

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