denzil87
Apr 29, 2009, 11:41 AM
Just need some help with this rights issue question I have from uni.
A company needs to raise £12000000 to fund a new project. It is considering undertaking a 20% discounted share rights offer and the current market capitalisation is £45m (comprising of 18 million 50p shares). Calculate the expected likely share price after such a rights issue if: (i) the current equity return is sustained by the new project and (ii) the new project is expected to achieve a return of 14%.
Be grateful if someone can point me in the right direction with this. Not sure if/how I work out the Theoretical Ex rights price.
Many Thanks
A company needs to raise £12000000 to fund a new project. It is considering undertaking a 20% discounted share rights offer and the current market capitalisation is £45m (comprising of 18 million 50p shares). Calculate the expected likely share price after such a rights issue if: (i) the current equity return is sustained by the new project and (ii) the new project is expected to achieve a return of 14%.
Be grateful if someone can point me in the right direction with this. Not sure if/how I work out the Theoretical Ex rights price.
Many Thanks