1.) Bowman, Inc., is proposing a rights offering. Presently there are 800,000 sh
ID: 2642463 • Letter: 1
Question
1.) Bowman, Inc., is proposing a rights offering. Presently there are 800,000 shares outstanding at $48 each. There will be 160,000 new shares offered at $40 each.
a.
What is the new market value of the company?
New market value
______________________$
b.
How many rights are associated with one of the new shares?
Number of rights needed________________
c.
What is the ex-rights price? (Round your answer to 2 decimal places. (e.g., 32.16))
Ex-rights price______________________
$
d.
What is the value of a right? (Round your answer to 2 decimal places. (e.g., 32.16))
Value of a right_____________________
$
1.) Bowman, Inc., is proposing a rights offering. Presently there are 800,000 shares outstanding at $48 each. There will be 160,000 new shares offered at $40 each.
Explanation / Answer
(a) New market value = 800000*48 + 160000*40 = $44800000
(b) 5 rights per new share
(c) Ex-right price of each share = 8 mn / 240000 = $33.33
(d) Value of a right = 48 - 33.33 = $14.67
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