Calculating the value of a right
Discussion
Quick questions chaps as I struggle my way through past exam papers...
"The New Word Corporation has 1,000,000 shares outstanding at €30/share. If the firm wishes to raise €13.5 million at a subscription price of €27/share, calculate the value of a right"
My answer;
(Stock Price - Rights subscription price per share) / # of rights required to buy one share + 1
= €30 - €27/1+1 = €1.50
Is it that simple??
"The New Word Corporation has 1,000,000 shares outstanding at €30/share. If the firm wishes to raise €13.5 million at a subscription price of €27/share, calculate the value of a right"
My answer;
(Stock Price - Rights subscription price per share) / # of rights required to buy one share + 1
= €30 - €27/1+1 = €1.50
Is it that simple??
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