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TERP

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FM Exams › TERP

  • This topic has 1 reply, 2 voices, and was last updated 2 months ago by John Moffat.
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  • Author
    Posts
  • December 3, 2022 at 12:53 pm #673212
    avishco
    Participant
    • Topics: 17
    • Replies: 44
    • ☆☆

    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

    December 3, 2022 at 5:07 pm #673250
    John Moffat
    Keymaster
    • Topics: 56
    • Replies: 51563
    • ☆☆☆☆☆

    Yes, 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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