Red Shoe Company Has Concluded That Additional Equity Financing Will Be Needed To Expand Operations And That The Needed 1 (41.38 KiB) Viewed 47 times
Red Shoe Company Has Concluded That Additional Equity Financing Will Be Needed To Expand Operations And That The Needed 2 (41.38 KiB) Viewed 47 times
Red Shoe Company has concluded that additional equity financing will be needed to expand operations and that the needed funds will be best obtained through a rights offering. It has correctly determined that as a result of the rights offering, the share price will fall from $120 to $102 ($120 is the rights-on price; $102 is the ex-rights price,also known as the when-issued price). The company is seeking $12 million in additional funds with a per-share subscription price equal to $60. How many shares are there currently, before the offering? (Assume that the increment to the market value of the equity equals the gross proceeds from the offering.)
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