Boles Bottling Co. has issued rights to its shareholders. The subscription price

Question

Boles Bottling Co. has issued rights to its shareholders. The subscription price is $42 and seven rights are needed along with the subscription price to buy one of the new shares. The stock is selling for $51 rights-on. a. What would be the value of one right? (Do not round intermediate calculations and round your answer to 2 decimal places.) Value of one right b. If the stock goes ex-rights, what would the new stock price be? (Do not round intermediate calculations and round your answer to 2 decimal places.) New stock price

Explanation / Answer

One right will get 1/7 of share
Price paid will be 42/7=6

Value=6-51/9=0.333

New stock price=51-0.333=50.6666

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