Luther Industries Currently Has 100 Million Shares of Stock Outstanding

Luther Industries currently has 100 million shares of stock outstanding at a price of $25 per share. The company would like to raise money and has announced a rights issue. Every existing shareholder will be sent one right per share of stock that he or she owns. The company plans to require twenty rights to purchase one share at a price of $30 per share. The amount of money that Luther will raise through its rights offering is closest to ________.

A) $750 million
B) $187.5 million
C) $150 million
D) $600 million

Correct Answer:

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