Subscription price under rights issue
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Hoobastink Mfg. is considering a rights offer. The company has determined that the ex-rights price will be $61. The current price is $68 per share, and there are 10 million shares outstanding. The rights offer would raise a total of $60 million. What is the subscription price?
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Solution Summary
The solution explains how to calculate the subscription price in a rights issue.
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Let P be the subscription price.
First let us calculate the number of new shares that will be issued
The number of new shares = the amount ...
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