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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
Shares
1000 – cost £1600
2000 – cost £3600Total shares = 3000 total cost £5200 cost per share £1.73
MAY 2010 – 1 for 2 RIGHTS ISSUE TAKEN UP, COSTING 2.20 GBP PER SHARE”
my understanding of this is for every share you hold 2 rights issue share will occur at £2.20 per share
so 3000 shares x 2 x 2.20 =£13,200
So the new holding looks like
1000 – cost £1600
2000 – cost £3600
6000 – cost £13,200Total shares 9000 total cost £18,400 cost per share £2.04
Apologies mambo is correct its 1 rights share for every 2 shares that you hold
so 3000 shares /2 =1,500 x £2.20 =£3,300
So the new holding looks like
1000 – cost £1600
2000 – cost £3600
1500 – cost £3,300Total shares 4500 total cost £8,500 cost per share £1.89
In summary
£9,800 – (3500/4500*£8,500) = £3,188.89 gain
Note – this assumes that none of the matching rules apply.
Matching rules are
1. Match disposal with any acquisition same day
2. Match disposal any acquisition within 30 days
3. Average cost per share pool
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