Question
A limited company currently has 12 million R1 shares in issue with a market price of R5 per share. The directors will attempt to raise
A limited company currently has 12 million R1 shares in issue with a market price of R5 per share. The directors will attempt to raise an additional R20 million by means of a rights issue which will be done later today. The price offered to existing shareholders will be R4 per share. The directors plan to invest the cash raised from this right issue into a project with an estimated net present value of R2 million. The directors estimated that the costs associated with this issue will be R1 million.
a) Calculate the expected share price after this rights issue.
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Income Tax Fundamentals 2013
Authors: Gerald E. Whittenburg, Martha Altus Buller, Steven L Gill
31st Edition
1111972516, 978-1285586618, 1285586611, 978-1285613109, 978-1111972516
