An Edmonton firm has 800,000 shares outstanding at a market price of $120 a share. It wants to raise $16 million via a rights offering. The subscription price is $100 per share. What will the firm be worth after the offering?

A) $96.0 million
B) $98.4 million
C) $105.0 million
D) $112.0 million
E) $115.8 million

Question

Emilee Brookman · Accepted Answer

Final Answer : D, Explanation :  The firm initially has a market value of 800,000 shares * $120 = $96 million. It raises $16 million through the rights offering, so the new total value is $96 million + $16 million = $112 million.

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