The management of dragonfly inc has decided to increase its, Ask an Expert

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The management of Dragonfly Inc. has decided to increase its equity capital by undertaking a rights issue. It is planned to raise additional capital of $20 million. The company has 5,000,000 outstanding common shares with a current market price of $50 per share. Shareholders need 10 rights to buy a new share.

a) Calculate the ex-rights price per share and the value of a right.

b) Justin currently has 20,000 shares of Dragonfly’s common stock and $50,000 cash. Assume Justin exercises his rights to buy the new shares, determine the amount of gain or loss for Justin.

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92863423

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