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Right isssue calculation

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FM Exams › Right isssue calculation

  • This topic has 1 reply, 2 voices, and was last updated 9 years ago by John Moffat.
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  • August 22, 2015 at 7:41 am #268058
    armaghanbutt
    Member
    • Topics: 27
    • Replies: 39
    • ☆☆

    Hi sir ! am confused in issue cost
    J13 Option 2
    GXG Co could seek a stock market listing, raising $3·2 million after issue costs of $100,000 by issuing new shares
    to new shareholders at a price of $2·50 per shaRe
    sol :The cash to be raised = 3,200,000 + 100,000 = $3,300,000
    The number of shares issued = 3,300,000/2·50 = 1,320,000 shares
    Total number of shares after the stock market listing = 11,320,000 shares

    But in june 15 he subract issue cost from share price
    price = (5 x 3·50 + (2·80 – 0·07))/6 = 20·23/6 = $3·37 per share)

    August 22, 2015 at 8:55 am #268067
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54701
    • ☆☆☆☆☆

    In GXG the question said that they raised 3.2M after issue costs. So the total actually raised was more than 3.2M

    In June 2015, the question tells you how much was raised (because you know how many shares and at what price) and then says the issue costs are paid out of the money raised. So the amount left is then lower.

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