Question

You currently own 8 percent of the 200,000 shares of outstanding stock in Jones, Inc. The...

You currently own 8 percent of the 200,000 shares of outstanding stock in Jones, Inc. The firm has announced it is offering an additional 40,000 shares to the public. What will your new ownership position be if you opt to not participate in the additional stock offering? Assume the issue is fully subscribed. 6.67 percent

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Answer #1

Formula sheet

A B C D E
2
3 % ownership 0.08
4 Total Number of shares outstanding before offer 200000
5
6 Number of shares owned =D4*D3 =D4*D3
7
8 Additional shares offered 40000
9
10 Total Number of shares outstanding =D4+D8
11
12 % Ownership =Number of shares owned / Number of shares outstanding
13 =D6/D10 =D6/D10
14
15 Hence new ownership % =D13
16
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