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Phone Company Inc. makes a rights issue at a subscription price of $7 a share. One...

Phone Company Inc. makes a rights issue at a subscription price of $7 a share. One new share can be purchased for every five shares held. Before the issue there were 20 million shares outstanding what is the total amount of new money raised? $20 million

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Answer #1

Number of shares issued = 20,000,000 / 5 = 4,000,000 shares

Total amount of new money raised = 4,000,000 shares * $7 a share

Total amount of new money raised = $28,000,000

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