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hello Sir,
I dont understand why we divide 5.312 by 3.32 .
i am ok with denominator figure .
is 5.312 is whole right issue
i would be thankful if u explain me these lines from the question along with the figure above
The equity finance will be raised in dollars by a rights issue in the home country of NG Co. Issue costs for the rights
issue will be $312,000. The rights issue price will be at a 17% discount to the current share price.
Kind regardsThey are raising EUR 13M and half of it is to come from equity – i.e. EUR 6.5M
However the question says that it is to be raised in $’s and so the amount of $’s that are needed from equity are EUR 6.5M / 1.3 = $5M.
There are issue costs of $312,000 and so in order to have $5M available for the project, they actually need to raise $5.312M
You say that you are happy with the $3.32 (the amount being charged for each share), so it means that the number of shares that they need to issue is 5.312M / 3.32
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