Hanging Valley plc has issued share price of 2m ordinary shares, nominal value £1. The board of the company has decided it needs to raise £1m, net of issue costs, to finance a new product. It has been suggested that additional finance raised by means of a 1 for 4 rights issue. The issue price will be at a 20 per cent discount to the current market price of £2.75 and issue costs are expected to be £50,000. Required: Calculate and explain the following: (a). the theoretical ex-rights price per share; (b). the net cash raised; (c). the value of the rights. (d). critically discuss the advantages and disadvantages of rights issue. I have the solution i just dont know howyou calculate the value of the rights. Its just written value of the rights 2.20 but im not sure how you got that Thank you
Hanging Valley plc has issued share price of 2m ordinary shares, nominal value £1. The board of the
company has decided it needs to raise £1m, net of issue costs, to finance a new product.
It has been suggested that additional finance raised by means of a 1 for 4 rights issue.
The issue price will be at a 20 per cent discount to the current market price of £2.75 and issue costs
are expected to be £50,000.
Required:
Calculate and explain the following:
(a). the theoretical ex-rights price per share;
(b). the net cash raised;
(c). the value of the rights.
(d). critically discuss the advantages and disadvantages of rights issue.
I have the solution i just dont know howyou calculate the value of the rights.
Its just written value of the rights 2.20 but im not sure how you got that
Thank you
You already calculate and give me a solution but im not sure how to calculate the value of the rights
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