Pietersen Corporation Must Raise an Additional $10,000,000 of Equity Capital

question 2

Short Answer

Pietersen Corporation must raise an additional $10,000,000 of equity capital through the sale of common stock in order to finance the construction of a new plant.The firm currently has an EPS of $5.40 and a P/E ratio of 10,with 1,200,000 shares outstanding.The firm will offer new shares to its current stockholders at $40 per share.Find (1)the number of new shares to be issued, (2)the ex-rights price of the stock (assuming that the new market value of the stock will simply be the proceeds of the new issue plus the current value of equity,divided by new shares outstanding),and (3)the value of one right. $\begin{array}{lll} & \text { Sub Price } & \text { Ex-rights } \\\text { a. } & \$ 39.65 & \$ 42.50 \\\text { b. } & \$ 40.25 & \$ 43.50 \\\text { c. } & \$ 42.65 & \$ 47.50 \\\text { d. } & \$ 44.55 & \$ 49.00 \\\text { e. } & \$ 46.65 & \$ 50.00\end{array}$

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Definitions:

Sarcophagus of Junius Bassus

An early Christian sarcophagus richly decorated with biblical scenes, notable for its sculptural quality and theological themes.

Crucifixion

A method of capital punishment where the victim is tied or nailed to a large wooden cross and left to die; also a central symbol of Christianity related to Jesus Christ's execution.

Christ Enthroned

A depiction in Christian art of Jesus Christ seated on a throne as a ruler and judge, often surrounded by other biblical figures.

Entry into Jerusalem

A biblical event commemorated in Christianity where Jesus Christ enters Jerusalem, an event celebrated on Palm Sunday.