Prahm Corp. wants to raise $4.4 million via a rights offering. The company currently has 500,000 shares of common stock outstanding that sell for $45 per share. Its underwriter has set a subscription price of $20 per share and will charge the company a spread of 6 percent. If you currently own 3,000 shares of stock in the company and decide not to participate in the rights offering, how much money can you get by selling your rights?

price for selling 3000 share right is $25060.87

Explanation:

Given data:

Total Amount raised=   $4,400,000  

Spreading rate = 6%

Subscription price =   $20 per share

Number of share owned by company = 500,000

Per share cost  = $45

Totals share own in the company = 3000

subscription price after deducting spreading rate

Now, Right share

Right price is calculated as

Right price = ((Number of share held * market price) + (Right share *Right price))/( Number of share held + Right share)

plugging all value in above relation

Right share = $36.65

single right value = 45- 36.65 = $8.35

Price for 3000 share right = 8.35 *3000 = $25060.86

answer; (c) penalty