BPP Black Friday sale! (28 Nov-1 Dec)

40% discount on all BPP books specially for OpenTuition students!
Get it here >>

existing share price

This topic has 1 reply, 2 voices, and was last updated 7 years ago by John Moffat.

Viewing 2 posts - 1 through 2 (of 2 total)

Author
Posts
May 7, 2018 at 5:21 pm #450487
stepstothebest
Member
- Topics: 62
- Replies: 15
TOYOTA Co announces a 2 for 5 rights issue at $2 per share. There are currently 10 million shares in issue, and the current market price of the share is $2.70.
TERP ………..$2.5 per share
issue ………….($2)
value of right $0.5
0.5/5 is $0.1 per existing share is my answer.
but,
in the answer sheet,
$0.5/5 * 2 = $0.2 per existing share.
I have no idea the reason they multiply 2 on this formula.
what did I miss? Sir
have nice dinner sir
May 8, 2018 at 5:55 am #450532
John Moffat
Keymaster
- Topics: 57
- Replies: 54795
They get 2 rights for every 5 shares.
Therefore for every 5 shares they get rights worth 2 x $0.5 = $1.0
Therefore for every existing share it is $1.0 / 5 = $0.2
Author
Posts

Viewing 2 posts - 1 through 2 (of 2 total)

You must be logged in to reply to this topic.