. A company wants to raise $2 million through a rights offering. The subscription price is $4, and the current stock price is $5. The firm currently has 1,000,000 shares outstanding. How many shares must be issued

0.33

Explanation:

Funds Required. = 2,000,000

Subscription Price = 4.00

Total New Shares=2000000/4 = 500,000

Current no of shares outstanding = 1,000,000

Right ratio =500000/1000000 = 0.5

Therefore, per share 0.5 right would be issued and 2 rights will be required to buy 1 share

Share price after right issuewill be:

=(Share price before rights + the subscription price per share)/Total number of shares

= ((1000000 × 5)+(500000 ×4) ÷ (1000000+500000)

= 4.67

Value of right = 5 - 4.67

= 0.33

Bet Wassup

Explanation: