Use the information below to answer the following two questions

GNK Inc is considering the investment of a large project. The IRR of the project is 10%, which is equal to the project's WACC. The project will be financed by a rights issue.

Which of the following about the effects of the project is the least accurate? Ignore any signalling effect.

a) The company's share price will be unchanged.

b) The market value of the company's assets will increase.

c) Existing shareholders will welcome the project as their wealth will increase.

d) The market value of the company's debt will not change.

e) The market value of the company's equity will increase.

The CFO of GNK Inc is having a second thought about the rights issue and is considering selling stocks in an SEO using a cash offer. Which of the following statements about the rights offer or cash offer is the least accurate?

a Shareholder are more likely to participate in a rights offer if the new shares are sold at a discounted price.

b) The issuance cost of a cash offer is likely to be higher than the rights offer.

c) A rights offer is only made to existing shareholders.

d) The right to participate in the rights offer can not be sold separately to other investors under all circumstances.

e) Cash offer is more likely to raise more money compared to a rights offer, assuming the same offer price.