Moon, Inc. is a family owned corporation with an authorized capital stock of P20million, P20 par value. Seventy five percent of the authorized were subscribed and paid. May owns one half of the issued stocks. June holds an equivalent of fifty percent of what May owns; and Julie owns an equivalent to seventy five percent of what June holds; the balance to other stockholders. The board of Moon, Inc. declared an additional issuance of stock for subscription of 60% of the unissued capital stock. This will allow all stockholders to exercise their preemptive right. The subscription price is 50% above par value. Required: 1. How many shares are offered for subscription? How much cash can be generated from this subscription? 2. If May, June and Julie will exercise their rights to subscribe, what is the maximum number of shares each can subscribed? How much cash maybe realized from each subscription? 3. Assuming that May, June and Julie will not exercise their preemptive rights, and their rights will be exercised by other stockholders, what is the percentage of their holdings in firm after the subscription? 4. Assuming that only June will not subscribe and his subscription will be offered to other stockholders, what is the percentage holdings of May, June and Julie in the firm? 5. Assuming May will not subscribe and her subscription will be taken both by June and Julie in proportion to their holdings before subscription, what will be the percentage holdings of May, June and Julie in the firm?

Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
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Moon, Inc. is a family owned corporation with an authorized capital stock of P20million, P20 par value. Seventy five percent of the authorized were subscribed and paid. May owns one half of the issued stocks. June holds an equivalent of fifty percent of what May owns; and Julie owns an equivalent to seventy five percent of what June holds; the balance to other stockholders.

The board of Moon, Inc. declared an additional issuance of stock for subscription of 60% of the unissued capital stock. This will allow all stockholders to exercise their preemptive right. The subscription price is 50% above par value.

Required:
1. How many shares are offered for subscription? How much cash can be generated from this subscription?


2. If May, June and Julie will exercise their rights to subscribe, what is the maximum number of shares each can subscribed? How much cash maybe realized from each subscription?


3. Assuming that May, June and Julie will not exercise their preemptive rights, and their rights will be exercised by other stockholders, what is the percentage of their holdings in firm after the subscription?


4. Assuming that only June will not subscribe and his subscription will be offered to other stockholders, what is the percentage holdings of May, June and Julie in the firm?


5. Assuming May will not subscribe and her subscription will be taken both by June and Julie in proportion to their holdings before subscription, what will be the percentage holdings of May, June and Julie in the firm?

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