Hello Tutor, I have an inquiry about the issue cost related to the theoretical ex-rights price of the right issue, which sometimes it will be deducted in calculating the value sometimes it will be added, I have a bit confusing when its to be added or deducted?
For June 2008 Q2(b) (iv)
Why the market capitalization or mv of per share is calculated after issue cost?
Thank you.
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Issue costs
7y ago#1If the business is paying out money (for the issue costs) then the business is worth less, and therefore the MV of the equity will be lower by the same amount.
For Dec 2009 Q3 NG CO part(a), why the Theoretical ex-rights price calculation included the issue costs? (should it be deducted to be calculated?)
which the answer should be $3.95?
7y ago#3For the theoretical ex-rights price you do not need to account for the issue costs (although you would not lose marks if you had done).
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