Hello Sir,
For below example no of share should not be $5m/$0.5 (value per share)?
Drumlin Co has $5m of $0·50 nominal value ordinary shares in issue. It recently announced a 1 for 4 rights issue at $6 per share. Its share price on the announcement of the rights issue was $8 per share.
What is the theoretical value of a right per existing share?
A $1·60
B $0·40
C $0·50
D $1·50
Thanks
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TERP
3y ago#1Yes, the number shares at the moment is indeed $5/$0.50
However this is not relevant for calculating the TERP.
Have you watched my free lectures on this?
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