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18 April, 15:54

Western Markets has 150,000 shares outstanding with a market price per share of $15. Each share is entitled to one right. If the firm sets a rights offer as 5 rights plus $10 for each new share, what will be the ex-rights price per share

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  1. 18 April, 16:00
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    Answer: $8.50

    Explanation:

    Price Outstanding Value

    Total Shares 15 150,000.00 $2,250,000.00

    Right Price 2 150,000.00 $300,000.00

    Total Shares and Value 300,000.00 $2,550,000.00

    Ex rights Price = $2,550,000/300,000 = $8.5
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