Ask Question
9 April, 14:30

Associated Breweries is planning to market unleaded beer. To finance the venture, it proposes to make a rights issue with a subscription price of $10. One new share can be purchased for each two shares held. The company currently has outstanding 100,000 shares priced at $40 a share. Assuming that the new money is invested to earn a fair return, give values for the following: (Do not round intermediate calculations. Enter your answers in dollars not millions.)

+4
Answers (1)
  1. 9 April, 18:09
    0
    Number of new shares:

    = 140,000 * (1:2)

    = 70,000

    Amount of new investment:

    = 70,000*$10

    = $700,000

    Total value of company after issue:

    = $700,000+140,000*$40

    = $6,300,000

    Total number of shares after issue:

    = 140,000+70,000

    = 210,000

    Share price after issue:

    = $6,300,000:210,000

    = $30
Know the Answer?
Not Sure About the Answer?
Get an answer to your question ✅ “Associated Breweries is planning to market unleaded beer. To finance the venture, it proposes to make a rights issue with a subscription ...” in 📙 Business if there is no answer or all answers are wrong, use a search bar and try to find the answer among similar questions.
Search for Other Answers