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hoa [83]
3 years ago
6

Knight Inventory Systems, Inc., has announced a rights offer. The company has announced that it will take five rights to buy a n

ew share in the offering at a subscription price of $33. At the close of business the day before the ex-rights day, the company’s stock sells for $54 per share. The next morning, you notice that the stock sells for $44 per share and the rights sell for $2 each. What is the value of the stock ex-rights? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)What is the value of a right?
Are the rights underpriced or overpriced?
What is the amount of immediate profit you can make on ex-rights day per share?
Immediate profit $
Business
1 answer:
s344n2d4d5 [400]3 years ago
5 0

Answer:

1) What is the value of a right?

value of a right = (stock price - right subscription price) / number of rights needed to buy a share

value of a right = ($54 - $33) / 5 = $21 / 5 = $4.20

2) Are the rights underpriced or overpriced?

the rights are underpriced because they are sold at $2 each, and their fair price is $4.20

3) What is the amount of immediate profit you can make on ex-rights day per share?

you buy 5 rights and use them to buy one stock at $33, total cost = (5 x $2) + $33 = $43. Immediately sell the stock at $44, and you can earn $1 per stock.

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2 years ago
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Arturiano [62]

Answer:

We sale 86 units in europe and 9 un the US to maximize revenue

Explanation:

Being revenue:

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we want to maximize this function:

Q_e \times (10 - 0.05Q_e) + Q_{US} \times (20 - Q_{US})

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we solve using excel solver

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2   Price            5.7       11

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7 0
3 years ago
Departmentalizing decisions increases the risk of __________ leading to a poor decision.
MAXImum [283]

Answer:

Bounded Rationality

Explanation:

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6 0
3 years ago
Read 2 more answers
You are offered a chance to buy an asset for $4,500 that is expected to produce cash flows of $750 at the end of Year 1, $1,000
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Answer:

<em>a. 22.64%</em>

Explanation:

At first we are going to need to compute the Internal rate of return(IRR) (in which the current value of inflows = the current value of outflows)

Let's let the IRR be <em>x percent</em>

Therefore $4,500 = $750 / (1.0x)

+ $1,000 / (1.0x) <em>power 2</em> + $850 / (1.0x) <em>power 3 </em>

+ $6,250 / (1.0x) <em>power 4</em>

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6 0
3 years ago
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