As a financial analyst at JPMorgan Chase, you are analyzing the rights offering for BMI Corporation. The company announc

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As a financial analyst at JPMorgan Chase, you are analyzing the
rights offering for BMI Corporation. The company announced rights
issue to build up more capital vie a 1 for 5 rights offer at $5 per
share. Before the rights issues there were 20 million shares
outstanding and the share price was $20. (Suppose 100% subscription
for the rights offering).
a. How many new shares will be issued? (sample answer:
1.5m or 1500000)
b. What was the total amount of new money raised? (sample
answer: $50.45m)
c. What was the value of the right to buy one new share?
(sample answer: $15.50)
d. What was the prospective stock price after the rights
issue? (sample answer: $15.50)