Answer: 9.09% ownership
Explanation:
Your shareholding in Webster Mills amounts to 10% of 3 million.
This translates to owning,
= 10% * 3 million
= 300,000 shares.
The firm’s upcoming offering allocates one right for every existing share, aiming to secure $12 million at a cost of $40 per share. We need to determine how many new shares will be introduced.
= 12,000,000/40
= 300,000 shares
This indicates that 300,000 new shares will be created.
<p.With the current count of 3,000,000 shares, the addition of 300,000 will result in a total of,
= 3,000,000 + 300,000
= 3,300,000 shares total.
<p.Having sold your rights means you still retain your shares, but your ownership percentage will adjust due to the increase in the total share count. <p.Your new ownership percentage is now,
= 300,000 shares (held by you) / 3,300,000 (total new outstanding shares)
= 0.0909
= 9.09%
<p.Thus, you now possess 9.09% of Webster Mills.