Require stockholders for purchasing share of new stock

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Reference no: EM131836638

Consider the situation faced by the CFO of a company with a market capitalization of $350 Millions of USD, e.g. the firm has 25 million shares outstanding, so the shares are trading at $14 per share. The CFO needs to raise $100 Millions of USDs and announces a rights issue. Each existing shareholder is sent 10 right for every share he or she owns. The CFO has not decided how many rights will be required to purchase a share of new stock. At the current price per share, what is the maximum amount of rights the CFO can require stockholders for purchasing a share of new stock and so be able to raise the $100 Millions of USDs?"

Reference no: EM131836638

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