Question

Leah, Inc., is proposing a rights offering. Presently there are 1,000,000 shares outstanding at $78 each. There will be 100,000 new shares offered at $70 each. a. What is the new market value of the company

Answer 1

the new market value of the company is $85,000,000

Step-by-step explanation:

The computation of the new market value of the company is shown below:

= Number of shares × price per share + new shares × price per share

= 1,000,000 × $78 + $70 × 100,000

= $85,000,000

Hence, the new market value of the company is $85,000,000

We simply applied the above formula so that the correct value could come