7. value: 14.00 points Keira Mfg. is considering a rights offer. The company has

Question

7.

value:
14.00 points

Keira Mfg. is considering a rights offer. The company has determined that the ex-rights price would be $101. The current price is $110 per share, and there are 21 million shares outstanding. The rights offer would raise a total of $70 million.

What is the subscription price? (Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16))

Keira Mfg. is considering a rights offer. The company has determined that the ex-rights price would be $101. The current price is $110 per share, and there are 21 million shares outstanding. The rights offer would raise a total of $70 million.

Explanation / Answer

$101 = $110 * 21 miilions + 70 millions / total no. of shares

Total no. of shares=23.564 millions

No, of rights shares= 23.564millions-21 millions= 2.564 millions

Subscription price = 70millions/2.564 millions =$27.30 (approx)

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