A Firm That Is Worth $800 Million Initiates a Rights

question 43

Multiple Choice

A firm that is worth $800 million initiates a rights offering that will allow each of its 100 million shareholders to buy one additional share at a discount of 15%. If only 25% of the existing
Shareholders participate in the rights offering and the others simply let their rights expire,
What is the percentage gain to the participating shareholders? Assume the firm is all-equity
Financed, and round your answer to the nearest tenth of a percent.

• A)14.1%
• B)3.7%
• C)15.0%
• D)4.9%

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