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Kryger [21]
3 years ago
15

Leah, Inc., is proposing a rights offering. Presently there are 400,000 shares outstanding at $54 each. There will be 25,000 new

shares offered at $45 each. a. What is the new market value of the company? (Do not round intermediate calculations.) b. How many rights are associated with one of the new shares? (Do not round intermediate calculations.) c. What is the ex-rights price? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) d. What is the value of a right? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
Business
1 answer:
MatroZZZ [7]3 years ago
7 0

Answer: a. $22,725,000

b. 16.00 rights per new share

c. $53.47 per share

d. $0.53 per share

Explanation:

(a)-New Market Value

New Market Value = [Number of shares outstanding x Price per share] + [New shares issued x Price per share]

= [400,000 shares x $54 per share] + [25,000 shares x $45 per share]

= $21,600,000 + $1,125,000

= $22,725,000

(b)-Number of rights needed

Number of rights needed = Current number of shares outstanding / New shares issued

= 400,000 shares / 25,000 shares

= 16.00 rights per new share

(c)-Ex-rights price

Ex-rights price = New Market Value / Total number of shares outstanding

= $22,725,000 / [400,000 shares + 25,000 shares]

= $22,725,000 / 425,000 shares

= $53.47 per share

(d)-Value of a right

Value of a right = Current market price per share - Ex-rights price

= $54.00 per share - $53.47 per share

= $0.53 per share

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This. Is. An. Issue.

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This demands that humans figure a way to require less of these precious resources, fast. By the year of 2150, we'll likely have surpassed our carrying capacity.

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However, despite humans being omnivores, we stubbornly refuse to eat our veggies. . . meaning a mass majority of us prefer to eat meat. We breed our animals to have offspring, giving us more meat. We generically enhance or even create our meat. We love meat.

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As you can see, humans end up with barely any amount of this vital energy, simply because we love meat. We feed the plants to the animals to keep them healthy so WE can then eat the said animals, thus resulting in a HUGE loss of energy. We use our land for pastures. We give other resources (like water) to the animals, again, so we can eventually consume them.

The earth is going to run out of resources at one point or another, but our current consumption habits will likely hasten this process as far as freshwater and food.

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Obviously it's a give-or-take thing.

Malthus said it right, three hundred years ago.

I get the length of this post was probably uneccesary but you asked a very good question that gave me an excuse to cover something in-depth.

I am inevitable.

~Troy

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