Question

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$

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