Funding required = 40 million Current market price Po = 2 Discount d= 20% S Ps =
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Question:
Funding required = 40 million Current market price
Po = 2 Discount
d= 20% S
Ps = 2 (1- 0.2)= 1.60
Px = 1.92
Outstanding Shares N= 100 million
Explain the impact on the value of the right if the issue is undertaken on the specified terms and the share (cum-rights) price falls to 1.8 shortly after the shareholders are invited to subscribe to the new issue.
Related Book For
Intermediate Accounting
ISBN: 978-0470161012
9th Canadian Edition, Volume 2
Authors: Donald E. Kieso, Jerry J. Weygandt, Terry D. Warfield.
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