Problem:
Bowman, Inc. is proposing a rights offering. Presently there are 600,000 shares outstanding at $47 each. There will be 120,000 new shares offered at $38 each.
Required:
Question 1: What is the new market value of the company?
Question 2: How many rights are associated with one of the new shares?
Question 3: What is the ex-rights price?
Question 4: What is the value of a right?
Note: Show all workings.