Bell Hill Mfg. is considering a rights offer. The company has determined that the ex-rights price would be $78. The current price is $100 per share, and there are 25 million shares outstanding. The rights offer would raise a total of $50 million. What is the subscription price? (Do not round intermediate calculations and round your answer to 2 decimal places, e. g., 32.16.)

Question

Kramer

Business

18 April, 19:16

Bell Hill Mfg. is considering a rights offer. The company has determined that the ex-rights price would be $78. The current price is $100 per share, and there are 25 million shares outstanding. The rights offer would raise a total of $50 million. What is the subscription price? (Do not round intermediate calculations and round your answer to 2 decimal places, e. g., 32.16.)

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Answers (1)

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Thalia Brandt · Answer 1

The price of subscription = 6.5

Explanation:

ex rights price = (current price * shares outstanding + amount raised) : (current shares + amount raised/subscription price)

78 = (100*25+50) : (25+50/Subscription price)

The price of subscription = 6.5