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    Rights Issue of Investing New Money

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    Rights. Associated Breweries is planning to market unleaded beer. To finance the venture, it proposes to make a rights issue with a subscription price of $10. One new share can be purchased for each two shares held. The company currently has outstanding 100,000 shares priced at $40 a share. Assuming that the new money is invested to earn a fair return, give values for the following:

    a. number of new shares
    b. amount of new investment
    c. total value of company after issue
    d. total number of shares after issue
    e. share price after the issue

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    Rights.  Associated Breweries is planning to market unleaded beer.  To finance the venture, it proposes to make a rights issue with a subscription price of $10.  One new share can be purchased for each two shares held.  The company currently has outstanding 100,000 shares priced at $40 a share.  Assuming that the new money is invested to earn a fair return, give values for the following:

    a. ...

    Solution Summary

    Answers questions pertaining to a rights issue.

    $2.19

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