Roth Corp. wants to raise $4.3 million via a rights offering. The company curren

Question

Roth Corp. wants to raise $4.3 million via a rights offering. The company currently has 530,000 shares of common stock outstanding that sell for $55 per share. Its underwriter has set a subscription price of $30 per share and will charge the company a spread of 6 percent.

If you currently own 6,000 shares of stock in the company and decide not to participate in the rights offering, how much money can you get by selling your rights? (Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16))

If you currently own 6,000 shares of stock in the company and decide not to participate in the rights offering, how much money can you get by selling your rights? (Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16))

Explanation / Answer

The person, holder of 6,000 shares, not taking the right shares, can get only the subscription price after deducting 6% underwriting charge.

Holder of 6,000 shares will get in total = ($30 - $30

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