Calculate the ex-right stock price, Financial Management

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DIY Inc. plans to raise $200,000 with a right offering. The current stock price is $100 and there are 80,000 shares outstanding.

a. If DIY sets the subscription price to be $80 and one right will be issued for each outstanding share, calculate the ex-right stock price and the value of a right.

b. Repeat part a if the subscription price is $10.

c. If DIY wants the ex-right stock price to be $50, what must be the subscription price?


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