19) Mr. and Mrs. Anderson own three shares of Magic Tricks Corporation's common stock. The market value of the stock is $60. The Andersons also have $48 in cash. They have just received word of a rights offering. One new share of stock can be purchased at $48 for each three shares currently owned (based on three rights). (Do not round intermediate calculations and round your answers to the nearest whole dollar.) a. What is the value of a right? Value per right $ b. What is the value of the Andersons’ portfolio before the rights offering? (Portfolio in this question represents stock plus cash.) Portfolio value $ c-1. Compute the diluted value (ex-rights) per share. Diluted value $ c-2. If the Andersons participate in the rights offering, what will be the value of their portfolio, based on the diluted value (ex-rights) of the stock? Portfolio value $ d. If they sell their rights but keep their stock at its diluted value and hold on to their cash, what will be the value of their portfolio? Portfolio value $
This question was answered on: May 23, 2022
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