In: Finance
Valiant Industries has 30 million shares of stock outstanding at a price of $25.44 per share. The company wishes to raise more money and plans to do so through a rights issue. Every existing stockholder will receive one right for each share of stock held. For every six rights held by the stockholder, they can buy one share at a price of $24.00 per share. If all rights are exercised, how much money will be raised in this offer? A. $127.2 million B. $720.0 million C. $120.0 million D. Some other amount
CALCULATION OF THE MONEY RAIESED FROM THE OFFERE | |||
Share outstanding = | $ 30.00 | Million Shares | |
Total Rights = | 30.00 | Million Rights | |
1 new shares are issued against 6 Right | |||
So number of shares are issued = $ 30 Million / 6 = | 5.00 | Million Shares | |
Issue price of the shares = 5 Million shares X $ 24 = | $ 120.00 | ||
So, Answer = Money raised from the offer = Option C = $ 120 Million | |||