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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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The form of business organization where an entity is legally separate from its owners and issues shares of stock is a.
Anna [14]

Answer:

corporation

Explanation:

4 0
2 years ago
Felipe's grandparents have given him $1,500.00 to invest while he is in college to begin his retirement fund. He will earn 2.3%
deff fn [24]

Answer:

$1,642.83

Explanation:

The amount after four years can be calculated using the formula below

A = P(1 +r)^n

where A= amount

P = Principal amount $1500

r= interest 2.3% or 0.023

n = time in year; 4

A = $1500(1 + 0.023)^4

A= $1500(1.023)^4

A=$1500x 1.095222

A=$1,642.83

8 0
2 years ago
All of the following are reasons a person might choose to work from home EXCEPT A. a Desire for more flexible hours B. the oppor
NeX [460]
The answer would be B.
8 0
3 years ago
Read 2 more answers
True/False: Santiago is the HR director of Illumin Media, a mid-sized organization. He notices that the proportion of minorities
Wewaii [24]

Answer and Explanation: The given case/scenario is true, since in this particular case the HR director tends to opt for recruiting methods under which the application will further reach a larger population. The recruiting method is done by contacting several professional association and thus outsourcing this task. This method is efficient and effective .

3 0
3 years ago
g Use the following information for questions 4-6. The 2016 Income Statement of Illini Company reported net sales of $8 million,
natima [27]

Answer:

Account receivable turnover ratio = 13.3

ROE= 4.19

Explanation:

Inventory turnover = 5 times

Cost of goods sold = $4.8 million

we know that:

Inventory turnover ratio = Cost of goods sold / Average inventory

  5 =  4.5 / Average inventory

 Average inventory = 4.5 / 5 = $ 0.9 million.

Account receivable (2016)= 700,000

Account receivable (2015)=500,000

we know that:

Average account receivable = [(open) A/c receivables + (end) a/c receivable ] / 2

              =  (500,000+700,000) /2

  Average account receivable = $ 600,000  

we know that: Account receivable turnover ratio= net credit sales / average account receivable.

                           =  8000000/600000

  Account receiable turnover ratio        = 13.3.

Asset turnover ratio= 1.8 times

sales = $ 8000000

we know that total asset turnover ratio= total sales / Total asset

                     1.8 = 8000000/Total assets

             Total assets = 8000000/1.8

            Total assets      =$4,444,444

Return on equity = Net income /Average shareholder equity

Average shareholder equity =[(open) equity + (end) equity)] / 2

  Paid-up capital + retained earning (2016)=1000+1140=2140,000

  Paid-up capital + retained earning (2015)=1000+670= 1670,000

Average shareholder equity =( 2140,000+1670,000) / 2

                                               =$1905,000

Return on equity   =  8000000/1905000 = 4.19

5 0
3 years ago
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