(Answered) Shareholder the right to buy

Finance

Problem: A firm currently has 20,000,000 shares with a price of $25 per share. They want to issue another 4,000,000 shares so they give each shareholder the right to buy .2 shares of new stock for $4 (it will take five rights to buy one new share for $20). How much are each of those rights worth? Provide your rationale and any supporting data.

a) $0.24

b) $.45

c) $.84

d) $1.11

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