I already asked the question but answers were wrong. So if you get these answers
ID: 2812258 • Letter: I
Question
I already asked the question but answers were wrong. So if you get these answers then you wrong also. Please can someone help to get the right answers.
A. Value of one right: $0.33 <----- Wrong Answer
B. New stock price: $50.67 <----- Wrong Answer
Boles Bottling Co. has issued rights to its shareholders. The subscription price is $42 and seven rights are needed along with the subscription price to buy one of the new shares. The stock is selling for $51 rights-on. a. What would be the value of one right? (Do not round intermediate calculations and round your answer to 2 decimal places.) Value of one right b. If the stock goes ex-rights, what would the new stock price be? (Do not round intermediate calculations and round your answer to 2 decimal places.) New stock priceExplanation / Answer
Solution: a. Value of one right $1.13 Working Notes: Value of one right = (Rights on price - Subscription price)/(No. of rights needed + 1 ) Value of one right = ($51 - $42)/(7 + 1 ) Value of one right = $9/8 Value of one right = $1.125 Value of one right = $1.13 b. New stock price $49.88 Working Notes: New stock price = Rights on price - Value of one right New stock price = $51 - $1.125 New stock price = $49.875 New stock price = $49.88 New stock price will be lower by value of one rights Please feel free to ask if anything about above solution in comment section of the question.
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