Ben and Jennie's Wants to Expand Their Operations into the Cookie

question 252

Multiple Choice

Ben and Jennie's wants to expand their operations into the cookie business. It needs $20 million to build a bakery and establish a distribution system. Currently, the firm has 1,300,000 shares of stock outstanding. The market price of the stock is $34 a share. Ben and Jennie's decides to raise the needed capital through a rights offering wherein every stockholder will receive one right for every share of stock they own. The subscription price will be $28. How many rights will be needed to purchase one new share of stock in this offering?

• A) 1.21 rights
• B) 1.27 rights
• C) 1.54 rights
• D) 1.82 rights
• E) 2.21 rights

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Definitions:

Osmosis

The movement of water molecules through a selectively permeable membrane from a region of lower solute concentration to one of higher concentration.

Protein

Large biomolecules, or macromolecules, composed of one or more long chains of amino acid residues, crucial for the structure, function, and regulation of the body's tissues and organs.

Malpighian Tubules

Excretory structures in certain arthropods like insects and spiders, involved in the removal of waste materials.

Osmosis

The movement of water molecules through a semipermeable membrane from a region of lower solute concentration to a region of higher solute concentration.