# The Timken Company has announced a rights offer to raise \$25 million for a new journal, the Journal of Financial Excess.

. The Timken Company has announced a rights offer to raise \$25 million for a new journal, the Journal of Financial Excess. This journal will review potential articles after the author pays a nonrefundable reviewing fee of \$2,500 per page. The stock currently sells for \$48 per share, and there are 2.6 million shares outstanding. The subscription price is set at \$43 per share. What is the ex-rights price per share?

<answer> new shares = \$25000000/\$32 = 581395.349 shares which will be issued

Number of rights to buy a stock = number of existing stocks outstanding / 581395.349 = 4.472 rights needed to buy a stock

Suppose that one investor holds 4.472 stocks, then after exercising rights, he will have 5.472 shares. His wealth will be 4.472 X \$48 (current stock price) + 1 X \$43 = \$257.656

Value of a stock after rights are exercised = \$257.656 / 5.472 = \$47.09

what i wanna ask is, on the first line of the answer, where did \$32 come from?