(b) The $30m market value calculated above reflects the position after the $10m rights issue has taken
place and been successful. The current market value of the existing shares, before the rights, will be
$10m less than this, ie $20m.
There are currently 5m shares in issue, giving a current MV of $4 per share. The rights shares are to
be issued at a 40% discount to this, ie $2.40.
To raise $10m (ignoring issue costs) the company needs to issue $10m/$2.40 = 4,166,667 shares. |
