In a recently announced rights offer, SNEAC Cellars Limited (SNC Ltd) made an offer to its existing shareholders to subscribe for one new ordinary share at $24 for every four shares already held. Just before the rights offer announcement, SNC Ltd traded at $28 per ordinary share.

What is the theoretical value of one right?

Answer 1

Choose...

$4.80

$600

$450

$6.00

$24.00

$24

$0.80

$2.20

$1.20

$3.20

$700

What is the value of the right per each ordinary share held by an existing shareholder?

Answer 2

Choose...

$4.80

$600

$450

$6.00

$24.00

$24

$0.80

$2.20

$1.20

$3.20

$700

Shareholder Mr Al Purchase owns 100 ordinary shares in SNC Ltd before the rights offer. Mr Purchaseintends to participate in this offer and will subscribe for all shares he is entitled to.

What is the total amount Mr Purchase will need to pay for the new ordinary shares he intends to buy via the rights offer?