MacKenzie Corporation currently has 11 million shares of stock outstanding at a price of $43 per share. The company woul
Posted: Thu May 26, 2022 7:55 am
MacKenzie Corporation currently has 11 million
shares of stock outstanding at a price of $43 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 five rights
to purchase one share at a price of $43 per share.
a. Assuming the rights issue is successful, how much money will
it raise?
b. What will the share price be after the rights issue? (Assume
perfect capital markets.) Suppose instead that the firm changes the
plan so that each right gives the holder the right to purchase one
share at $6 per share.
c. How much money will the new plan raise?
d. What will the share price be after the rights issue? e. Which
plan is better for the firm’s shareholders? Which is more likely to
raise the full amount of capital
shares of stock outstanding at a price of $43 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 five rights
to purchase one share at a price of $43 per share.
a. Assuming the rights issue is successful, how much money will
it raise?
b. What will the share price be after the rights issue? (Assume
perfect capital markets.) Suppose instead that the firm changes the
plan so that each right gives the holder the right to purchase one
share at $6 per share.
c. How much money will the new plan raise?
d. What will the share price be after the rights issue? e. Which
plan is better for the firm’s shareholders? Which is more likely to
raise the full amount of capital