Answer:
Proceeds from sale of rights will be $49407.62
Explanation:
Proceeds from the sale of rights
=> Net Proceeds per share = Subscription price per share x (1 – Spread)
= $27 × (1 – 0.06)
= $25.38 per share
=> New shares offered = money raised/net proceeds per share
= 5300000/25.38 = 208826 Shares
=> Number of rights needed = current shares/New share offered
= 590000/208826 = 2.82532
=> The Ex-rights stock price will be
Ex-rights stock price = ((Number of rights needed × selling price per share) + Subscription price) + (Number of rights needed + 1)
= ((2.82532 × 54) + $27 per share) / (2.82532 + 1) = $46.94177 per share
So, the value of a right = Selling price per share - Ex-rights stock price
= $54 - $46.94177
= $7.05823 per share
Therefore, proceeds from selling the rights will be
= Number of shares × value of a right
= 7000 × 7.05823
= $49407.62
Proceeds from sale of rights will be $49407.62
