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
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existing share price
8y ago#1They 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
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