Question
XYZ Limited's shares are currently selling at Rs. 13 per share. There are 10,00,000 shares outstanding. The firm is planning to raise Rs. 20 lakhs
XYZ Limited's shares are currently selling at Rs. 13 per share. There are 10,00,000 shares outstanding. The firm is planning to raise Rs. 20 lakhs to finance a new project.
Required
What are the ex-right price of shares and the value of a right, if
- The firm offers one right share for every two shares held
- The firm offers one right share for every four shares held
- How does the shareholders' wealth change for i. to ii.? How does right issue
increases shareholders' wealth?
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Managerial Accounting
Authors: Carl S Warren, James M Reeve, Jonathan Duchac
12th Edition
1133952402, 978-1133952404
