Sterling Heights Plc has an issued share capital of ordinary shares of each. The company makes a rights issue of new share for every ordinary shares held at an issue price of per share. If all rights are fully subscribed and paid for, what is the total cash proceeds raised from the rights issue in Naira?
Answer: 375000 ₦
Answer
The total cash proceeds raised from the rights issue is ₦375,000.
To determine cash proceeds from a rights issue, first compute the number of new shares created by dividing the total issued shares by the ratio factor (2,000,000 / 4 = 500,000 shares). Then, multiply this quantity by the offer price of ₦0.75 per share to get ₦375,000.
Step-by-Step Solution
Key Concept
Calculation of cash proceeds from a rights issue
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