urgent - practice exam question Watch

1. 1) XYZ plc Company is hoping to raise £4.50m

2) Current share price is standing at £4.00

3) Number of shares already issued 5m

4) Discount level expected 33%

The question is what form of rights issue should XYZ plc take?

anyone got an answer to this, will be highly appreciated (with workings).
2. No idea what this subject is for but I'll do it for you.

33% discount therefore they are hoping to raise cash at a share price at circa £2.64 a share.

£4.5m divided by £2.64 = 1.704m shares need to be placed.

Therefore new total shares in company = 6.7m

Don't know what your actual question is, but is that useful?
3. (Original post by Axion)
No idea what this subject is for but I'll do it for you.

33% discount therefore they are hoping to raise cash at a share price at circa £2.64 a share.

£4.5m divided by £2.64 = 1.704m shares need to be placed.

Therefore new total shares in company = 6.7m

Don't know what your actual question is, but is that useful?
ah cool, its financial management / corporate finance question - im a final year accounting student by the way. im pretty sure you've got the it right untill 6.7m - but then you must simplify by something along the lines of: for every 5 shares (5m shares in issue) you will have the right to obtain 1 share at a discount - but im not sure the ratio side
4. (Original post by Larissa White)
ah cool, its financial management / corporate finance question - im a final year accounting student by the way. im pretty sure you've got the it right untill 6.7m - but then you must simplify by something along the lines of: for every 5 shares (5m shares in issue) you will have the right to obtain 1 share at a discount - but im not sure the ratio side
Hmm ok, maybe 5m divided by 1.7m = 2.94

Not sure whtehr you round up or down, but maybe each holder has the right to 2/3 new shares per share they currently own?

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