Cs question

CA Rachit Agrawal (CA Practice) (400 Points)

21 February 2012

Please calculate the value of rights if-

Number of rights shares offered(n) 2000/=

Number of shares held(n) 1000/=

Ex-right price(Pex) 18/=

Rights offer price(Pof) 15/=

Face value of shares 10/=

and please tell me the method & formula also...plz..

Reply
Follow
Share

1 Replies

CS Nadeem Ahmed Siddique (Company Secretary) (354 Points)
Replied 21 February 2012

Ex-Right Value of a Share: P = MN+S / N+1

P = Market Value of Share ex-right

M = Cum-Market Price

S = Issue price of a new share

N = Number of existing shares required for getting one right share (in your case it is 1000/2000 = 0.5)

Hence,

P = M x 0.5+15 / 0.5+1

or, 18 = M x 0.5 + 15 / 0.5+1

Therefore, Ex- right value of share (P) = 24

Again,

Value of Right= Market value of Cum right share - Ex right value of share

i.e, 24-18 = 6

Alternatively, Value of Right (R) = M-S/N+1

= 24-15/0.5+1

= 6

1 Like

Start a New Discussion