Question
DISNEY has common shares issued in the amount of 2.000.000.000 (face value) and Retained earnings of 4.000.000.000 . The face value of the common
DISNEY has common shares issued in the amount of 2.000.000.000 € (face value) and Retained earnings of 4.000.000.000 €. The face value of the common shares is 500€ and the total number of shares issued is 4.000.000. DISNEY wants to raise new equity in 500.000.000 € issuing 1.000.000 new shares. Determine:
a) The value of a share before and after the issue.
b) Profits or losses of a new shareholder per share.
c) Profits or losses of an old shareholder per share.
d) DISNEY does not want to hurt previous shareholders with the new issue of shares.
How can it achieve this objective and still issue new shares? Determine the theoretical value of a subscription right and show that with a rights issue the old shareholders are not harmed.
Step by Step Solution
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There are 3 Steps involved in it
Step: 1
a Before the issue the total value of all shares is 2000000000 Thus the value of one share is 2000000000 4000000 shares 500 per share After the issue ...
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Step: 2
Step: 3
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Intermediate Accounting
Authors: Loren A Nikolai, D. Bazley and Jefferson P. Jones
10th Edition
324300980, 978-0324300987
