-
+1 - 312-224-1615
Get in touch with us
-
support@helpwithassignment.com
Send us an e-mail
Solution Library
Calculation of  Theoretical Ex-rights Price per Share of a Company
Question
Nike Ltd has issued share capital 4 million ordinary shares, with a par value of $1 each share. The board of the company has accepted the proposal for a new venture and therefore needs to raise $2 million.
The finance director has suggested that this finance be raised by way of a 1 for 4 rights issue which will be priced at a 30$ discount to the current market price of $3 per share.
- Calculate the theoretical ex-rights price per share
- Calculate the cash raised
- Calculate the value of the rights
The finance director also recommended having the rights issue underwritten by an investment ban or relevant finance house at the time of issues.
- Explain underwriting and consider whether underwriting is a valid expense at this time
- An investment bank sponsoring an issue will usually charge a fee of between 2-4% of the issue proceeds and then pays part that fee, 1.25-3% of the issue proceeds, to sub underwriters.
- Explain why, in general, rights issues are priced at a discount to the prevailing market price of the shares
- Calculate and discuss the factors that determine whether the actual ex-rights share price is the same as the theoretical ex-rights share price.
Summary: This question belongs to finance and discusses about discusses about a company’s theoretical ex-rights price per share to raise capital.
Answer is in Excel format
Download Full Solution
WHAT OUR STUDENTS SAY
I was very impressed by the time and effort that was put into writing my instrumentation engineering assignment by the assignment expert at HwA. No matter what time of the day or how late into the night it was my assignment help expert was always available to answer my queries and help me write the resistance assignment essay. I got an A grade in the assignment and that has greatly boosted the overall grade for the semester.
Charles Huang Student
When I chose the thesis topic for my economics professor I wanted it to be specific to the economic conditions prevailing in Australia and not just a generic essay. When I contacted HwA and told them of my specific requirement they teamed me up with an economics thesis writing expert who is actually teaching in New South Wales himself. Needless to say that the whole process from the very get go was smooth and excellent.
Rachel Kwong Student
I was stuck with my fault detection in logic circuit assignment when I looked up in the net for help. Luckily I came across HwA and it was all so quick. Within 5 minutes of me enquiring for help, they mailed me back letting me know about the process. The assignment went well and since then I always consult HwA for any of my assignments.
William Nicholson Student
Was partying late night and forgot about my biotechnology assignment which was about to submit in 5 hours. Then approached several service providers but they refused to take up the assignment. Finally TheReliableTutor.com saved me. Submitted the assignment on time..!!!
Jordan Student
When the time came to do my final year research dissertation I came across HwA who not only helped me to write the paper but also at the same time enlightened me about the process of writing a proper research paper. I understood the basic difference between an essay and a research paper, thanks to the research paper writing experts of HwA.
Ann Bushnell Student
Comments
this is a very good website
I have 50 questions for the same test your page is showing only 28
hi can you please help or guide me to answer my assignments. thanks
hi can anyone help or guide me to my assignments. thanks
This solution is perfect ...thanks
Hello Allison,I love the 2nd image that you did! I also, had never heard of SumoPaint, is something that I will have to exolpre a bit! I understand completely the 52 (or so) youtube videos that you probably watched. Sometimes they have what you want, sometimes they don't! However, it is always satisfying when you are able to produce something that you have taught yourself. Great job!Debra 0 likes
Perfect bank of solution.
great !
thanks for the quick response. the solution looks good. :)
thnx for the answer. it was perfect. just the way i wanted it.
works fine.