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John Moffat.
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armaghanbutt
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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 sharesBut 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)
John Moffat
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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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