ABC Ltd. is considering a right issue by issuing one equity share against two existing equity shares to raise funds for financing a new project requiring ₹ 10 crore. The floatation cost will be 15% of funds raised. The c
CS Professional · Corporate Funding & Listings in Stock Exchanges · PYQS · December 2024
ABC Ltd. is considering a right issue by issuing one equity share against two existing equity shares to raise funds for financing a new project requiring ₹ 10 crore. The floatation cost will be 15% of funds raised. The company currently has equity share capital of ₹ 2 crore divided into shares of ₹ 10 each fully paid and the current market price of its share is ₹ 250. The offer price for right has been fixed at ₹ 100 per share. Will the amount raised be sufficient for the new project? Explain.
Answer & Explanation:
Fund raised from right issue = Number of right shares x offer price = 10,00,000 × ₹ 100 = ₹ 10 crore Since the company requires ₹ 10 crore for financing a new project, the amount raised will be sufficient.
Topics: Rights Issue
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