If a company has 2240 million shares outstanding and each share is worth AUD 3.60 the market
Question:
If a company has 2240 million shares outstanding and each share is worth AUD 3.60 the market capitalization (value of the company) is __ million AUD. The company seeks to raise AUD 728 million by selling new shares with a subscription price of AUD 2.60, therefore it has to issue ___ million new shares. After issuing these new shares successfully its new market capitalization will be ___ million AUD and the total amount of shares will grow to ___million.
As a result the value of each share after the issue will be___ AUD. The difference between the subscription price and the share price after the issue is ___AUD. Therefore, it is worth to pay up to___ AUD for the RIGHT to buy shares at AUD 2.60.
Compare the old share price with the share price after the issue. It dropped by ___AUD. The ratio of the number of old shares to newly issued shares is exactly___ . This is also the number of old shares you need to get ONE RIGHT for a new share. HINT: Check if old shareholders' losses can be recovered by selling the right. If your result is off by more than 0.01 AUD you have most likely done an error.
Differential Equations and Linear Algebra
ISBN: 978-0131860612
2nd edition
Authors: Jerry Farlow, James E. Hall, Jean Marie McDill, Beverly H. West