Maxwel ltd intends to raise shs.25m.to finance a new project through a rights issue. The project...

 

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Maxwel ltd intends to raise shs.25m.to finance a new project through a rights issue. The project has a 10-year economic life with no salvage value and is expected to generate annual cash flows of shs.7m. The company has shs.4m. issued and fully paid shares. The cost of capital is 15% and before the announcement of the rights issue the market price per share was shs.28. Required; The cum rights market price per share. (4 marks) Maxwel ltd intends to raise shs.25m.to finance a new project through a rights issue. The project has a 10-year economic life with no salvage value and is expected to generate annual cash flows of shs.7m. The company has shs.4m. issued and fully paid shares. The cost of capital is 15% and before the announcement of the rights issue the market price per share was shs.28. Required; The cum rights market price per share. (4 marks)