UNIT 5: ISSUING SECURITIES Group B: Problem Solving / Critical Analysis Questions [15 marks] 1. 2021 April-May Q.No. 4 Mountain Cement Company (MCC) plans to raise an additional rupee of 10 million through rights offering. Current market price of the company is Rs 300. It has 200,000 shares outstanding. Stockholders are offered a new share at a price of Rs 200 each. a. Calculate number of new shares to be issued to raise required funds and number of rights required to purchase one new share. Gra b. Calculate theoretical value of each right and ex-rights price. c. Ram Karki's total assets consist of 1,000 shares of MCC and Rs 50,000 cash balance. Prepare statements of Mr. Karki's total assets before rights offerings. d. Prepare statement showing Mr. Karki's total assets after rights offerings for each of these courses of action if, i. he sells all his rights. ii. he exercises all his rights. iii. he neither exercises nor sells the rights. [4+4+3+4] Ans: (a) 50,000 shares and 4 rights(b) Rs 20 and Rs 280 (c) Rs 350,000 (d) Value of stock: (i) Rs 280,000 (ii) Rs 350,000 (iii) Rs 280,000