BTY Co issues 1000 shares with a par value of R50. They expected a minimum of R50 000 (in equity) from the sale of the shares. However, all 1000 shares were purchased in the market below par, at R25.

Question 1.

Explain the difference between par value and economic value.

Question 2

Use an appropriate example and explain why the company should consider issuing shares at no par value.