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XYZ Corporation issued 7 million shares of common stock in its initial public offering. It later purchased 500,000 shares of Treasury stock. XYZ recently engaged an underwriter to raise capital by selling an additional 3 million shares through a standby rights offering. By the expiration date of the offering, only 2 million shares were sold through exercise of the rights. As a result, how many shares will XYZ have outstanding

Respuesta :

Answer:

The number shares XYZ will have outstanding is 8,500,000 shares.

Explanation:

Shares outstanding refers to the addition of the shares of a company that are currently held by its shareholders, the share blocks in the hands of institutional investors, and its restricted shares owned by its officers and insiders, but minus the treasury shares which are held by the company  itself.

From the question, we have the following:

Number shares issued in initial public offering = 7,000,000

Treasury stock purchased = 500,000

Shares sold by the expiration date of the offering additional 3 million shares = 2,000,000

Therefore, the number of shares outstanding can be calculated as follows:

Number of shares outstanding = Number shares issued in initial public offering - Treasury stock purchased + Shares sold by the expiration date of the offering additional 3 million shares = 7,000,000 - 500,000 + 2,000,000 = 8,500,000

Therefore, the number shares XYZ will have outstanding is 8,500,000 shares.

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