Decide not to participate in the rights offering

Assignment Help Financial Management

Reference no: EM131016120

Roth Corp. wants to raise $4.5 million via a rights offering. The company currently has 550,000 shares of common stock outstanding that sell for $80 per share. Its underwriter has set a subscription price of $40 per share and will charge the company a spread of 4 percent.

If you currently own 2,500 shares of stock in the company and decide not to participate in the rights offering, how much money can you get by selling your rights?

Reference no: EM131016120

Questions Cloud

General dividend valuation model : According to the general dividend valuation model, a firm that reinvests all its earnings and pays no cash dividends can still have a common stock value greater than zero. How is this possible?

Cost of capital assignment : Calculating Cost of Debt Gauss Corporation issued 20-year Bonds bearing a 9% coupon, payments made semiannually, 7 years ago. The bonds currently sells for 108 percent of par value. The company’s tax rate is 38 percent. The Book Value of this issue i..

What is the value of the stock ex rights : Knight Inventory Systems, Inc., has announced a rights offer. The company has announced that it will take three rights to buy a new share in the offering at a subscription price of $61. The next morning, you notice that the stock sells for $70 per sh..

Firm with high fixed costs and low variable costs : You are involved in the planning process for a firm that is expected to have a large increase in sales next year. Which type of firm would benefit the most from that sales increase: a firm with low fixed costs and high variable costs or a firm with h..

Decide not to participate in the rights offering : Roth Corp. wants to raise $4.5 million via a rights offering. The company currently has 550,000 shares of common stock outstanding that sell for $80 per share. Its underwriter has set a subscription price of $40 per share and will charge the company ..

Equipment required for the project has no salvage value : You are the financial analyst for a tennis racket manufacturer. The company is considering using graphite like material in its tennis rackets. The company has estimated the information in the following table about the market for a racket with the new..

What quantity would generate a profit : The company's fixed operating cost are $500,000. its variable costs are $3.00 per unit, and the product's sales price is $4.00. What is the company's breakeven point? What Quantity would generate a Profit of $1,000,000?

What is the subscription price : Keira Mfg. is considering a rights offer. The company has determined that the ex-rights price would be $63. The current price is $75 per share, and there are 25 million shares outstanding. The rights offer would raise a total of $50 million. What is ..

Nominal rate of return with semiannual compounding : If you invest $500 today and can earn a 9.00% nominal rate of return with semiannual compounding, what will be your effective annual rate of return? If you save $330 a month for retirement and you can earn a nominal 8.60% rate of return with monthly ..

User Account

All Pages