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Hello, little help regarding value of rights.
It is calculated (:ex right price per share-cost of rights)/no.existing shares….or exiting+new share.?
Eg. 1 for 5 rightsIn Bpp revisionkit(Tirwen co), they use onlu existing..5 in this case.
But in Quiz 11, example 1,you use new+existing, answer 2,65.You are confusing two things.
The question in the quiz asks for the ex-rights price, and this is 2.65. (And the Tirwen question in part (a) (i) does it exactly the same way).
Part (a) (ii) of Tirwen asks for the value of the rights. If they ask for the value of the rights for each new share then it is the difference between the ex-rights price and the cost of taking up the rights. If they ask for the value of the rights per existing share, then you divide this figure by the number of existing shares that were needed to get 1 new share.
I do deal with this in my free lecture (the lectures are a complete free course for F9 and cover everything needed to pass the exam well).
It seems that you are using an old edition of the BPP Revision Kit (the new one does not contain Tirwen). That is no problem (provided it is not too old) but do be aware that the format of the exam is now going to be different (with more MCQ’s and fewer long-form questions). You can find a specimen exam on the ACCA website.
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