Rights. In 2001 Pandora, Inc., makes a rights issue at a subscription price of $5 a share. One new share can be purchased for every four shares held. Before the issue there were 10 mil- lion shares...

Rights.



In 2001 Pandora, Inc., makes a rights issue at a subscription price of $5 a share. One new share can be purchased for every four shares held. Before the issue there were 10 mil- lion shares outstanding and the share price was $6.

a. What is the total amount of new money raised?

b. What is the expected stock price after the rights are issued?