Western airline has decided to raise 5m in new equity by, Ask an Expert

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Western Airline has decided to raise $5M in new equity by means of a rights offering. They have decided to issue 50,000 new shares. The stock currently sells for a rights-on price of $150 per share. If the ex-rights price is expected to be $133.33 per share, answer the following questions assuming all the rights are exercised unless otherwise stated. (a) What is the issue price? (b) How many shares are currently outstanding (before the rights issue)? (c) What percentage of the rights were actually exercised if the ex-rights price turns out to be $135.71? (d) Suppose the firm anticipates that 30% of the rights will not be exercised. What should the issue price be if the other issue terms stay the same and the firm wants to raise the same amount of money?

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92166903

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