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John Moffat.
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poqipi11
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Hi, how do we deal with issue costs in terp calculation?
John Moffat
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Issue costs are rarely relevant in exam questions on rights issues (because in practice the issue costs for rights issues will obviously be small).
If they are relevant, then if they are paid out of the amount raised then the market value of the company will increase by the net amount raised (after subtracting the issue costs).
You should have a past exam question called Grenarp in your Revision Kit which is a good question to see what is happening.
poqipi11
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