A company has just gone through with a right issue. After the issue, thenumber of outstanding shares is increased by 25% and 200,000 new shares willbe issued. Each right is worth $0.13 and to get a newly issued share you needto use 15 rights. Knowing that the subscription price is $14
- What is the share price after the right issue?
I`m using: Value of rights=ex price - subsciption / Rights to buy +1
Solving for ex-price:
0.13 = x - 14 / 15 +1
x= 16.08
- What was the share price before the rights issue?
Solving for market value share prior to issue:
Ex right price = Market value share prior to issue + cash raised from rights issue / Total number of shares
End up getting Market Value= 10.064.000
Then, Market Value prior/no. shares prior
10.640.000/640.000= 15.7250
Share price before= 15.7250 & share price after = 16.08
Is this right? Cuz in theory the price after the issue should be lower than before right? 15.7250>16.08
- What is the share price after the right issue?
I`m using: Value of rights=ex price - subsciption / Rights to buy +1
Solving for ex-price:
0.13 = x - 14 / 15 +1
x= 16.08
- What was the share price before the rights issue?
Solving for market value share prior to issue:
Ex right price = Market value share prior to issue + cash raised from rights issue / Total number of shares
End up getting Market Value= 10.064.000
Then, Market Value prior/no. shares prior
10.640.000/640.000= 15.7250
Share price before= 15.7250 & share price after = 16.08
Is this right? Cuz in theory the price after the issue should be lower than before right? 15.7250>16.08