ABC  Company has 100,000 authorized number of common stock, which 80,000 shares were issued and outstanding.  The company issues 20,000 additional shares to other people, Mr. Go’s ownership in the company is 5,000 shares. Should Mr. Go did not exercised the pre-emptive right, how much is the dilution in his ownership interest in the company? a. 25% b. 0 c. 1.25% d. 20%

SWFT Comprehensive Vol 2020
43rd Edition
ISBN:9780357391723
Author:Maloney
Publisher:Maloney
Chapter20: Corporations: Distributions In Complete Liquidation And An Overview Of Reorganizations
Section: Chapter Questions
Problem 12CE
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ABC  Company has 100,000 authorized number of common stock, which 80,000 shares were issued and outstanding.  The company issues 20,000 additional shares to other people, Mr. Go’s ownership in the company is 5,000 shares. Should Mr. Go did not exercised the pre-emptive right, how much is the dilution in his ownership interest in the company?

a. 25%

b. 0

c. 1.25%
d. 20%

 

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