Question
ABC PLC issued 1 for 4 rights shares on 31st May 2015 at an exercise price of $2. The market value of its shares immediately
ABC PLC issued 1 for 4 rights shares on 31st May 2015 at an exercise price of $2. The market value of its shares immediately prior to the rights issue was RM 3.0 per share. ABC PLC had 1 million shares before the issuance of rights shares. All rights were exercised by shareholders on 31st May 2015.
You are required to calculate the theoretical ex-right price (TERP) and the value of the right. Your calculation must be able to show the proper steps.
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Intermediate Accounting
Authors: J. David Spiceland, James Sepe, Mark Nelson, Wayne Thomas
9th Edition
125972266X, 9781259722660
