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Good evenining,
i am having difficulty in calculating the following Question:
3,500 shares in ABC plc were sold for 9,800. Jay had purchased ABC plc shares at the following times;
May 2008 – 1,000 shares costing 1,600 GBP
Aug 2009 2,000 shares costing 3,600 GBP
“MAY 2010 – 1 for 2 RIGHTS ISSUE TAKEN UP, COSTING 2.20 GBP PER SHARE”how can i calculate the last purchase in may 2010?
thanks
Lee
I’m not a tutor but I’ve seen your question so thought I’d jump in.
A 1 for 2 rights issue means that a shareholder has a right to buy, at a discounted price, 1 additional share for every 2 that they currently own.
In your example the shareholder owns 3000 shares (May + August purchases) so they are able to buy 1500 shares at £2.20. So the total cost of the purchase is 1500 x £2.20 = £3300.
Hope this helps and good luck in the exam!
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