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April 2008 Q9

Discussion in 'CB1' started by AKS01, Jul 14, 2019.

  1. AKS01

    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?
     
    AKS01, Jul 14, 2019
    #1
  2. Lynn Birchall

    Lynn Birchall ActEd Tutor Staff Member

    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
     
    Lynn Birchall, Jul 15, 2019
    #2
    AKS01 likes this.

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