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Red Shoe Co. has concluded that additional equity financing will be needed to expand operations and that the needed funds will be best obtained through a rights offering. It has correctly determined that as a result of the rights offering, the share price will fall from $60 to $42 ($60 is the rights-on price; $42 is the ex-rights price,also known as the when-issued price). The company is seeking $10 million in additional funds with a per-share subscription price equal to $30. How many shares are there currently, before the offering? (Assume that the increment to the market value of the equity equals the gross proceeds from the offering.)

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92267388

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