Rights Offerings [LO4] Big Time, Inc., is proposing a rights offering. Presently there are 500,000 shares outstanding at $81 each. There will be 60,000 new shares offered at $70 each.
What is the new market value of the company?
How many rights are associated with one of the new shares?
What is the ex-rights price?
What is the value of a right?
Why might a company have a rights offering rather than a general cash offer?