MacKenzie Corporation currently has 10 million shares of stock outstanding at a price of $40 per
QUESTION
MacKenzie Corporation currently has 10 million shares of stock outstanding at a price of $40 per share. The company would like to raise money and has announced a rights issue. Every existing shareholder will be sent one right per share of stock that he or she owns. The company plans to require ten rights to purchase one share at a price of $40 per share. How much money will it raise if all rights are exercised?
MacKenzie Corporation Total number of shares outstanding 10 million Number of right entitlements required for one share 10:1 Total number of rights on offer 1/10*10 = 1
ion Price per share $40 Total funds that will be raised if all rights were exercised =$40 * 1 million = $40 million
ANSWER:
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