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December 2008 a I can’t find the number of existing shares in the question. It says it’s 4,000,000
q 1 a
You don’t actually need to know the number of existing shares, although you can calculate how many there must be.
The rights issue is at 2.50 less 20% = $2 per share. They are raising $5M and therefore must be issuing $5M/$2 = 2.5M shares.
It is a 1 for 4 rights issue and there the current number of shares in issue must be 4 x 2.5M = 10M.