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April 2008 Q9

A

AKS01

Very Active Member
I am trying to calculate the theoretical ex-rights price but cannot get to any of the answers from the multiple choice.
Would it possible to break down the calculation please?
 
Hi

This is a scrip issue so, unlike a rights issue, doesn't raise any new capital for the company.
The number of shares in issue will increase from 2m (with a price of £4.00) to 2.5m with a price of :
(2m x £4.00) / 2.5m = £3.20

Hope this sorts it
Lynn
 
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