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Difficulty: MediumIssue of Shares at Par, Premium, and Discount

Nova Crest Logistics Plc issued 90,00090,000 ordinary shares of ₦3.00\text{₦}3.00 nominal value each at a discount of 5%5\%. Assuming all shares were fully subscribed and paid for, what is the total net cash amount, in ₦\text{₦}, received by the company from this share issue?

Answer: 256500 ₦

Answer

The total net cash amount received by the company from the share issue is ₦256,500.
The issue price per share is determined by subtracting the 5% discount (₦0.15) from the nominal value of ₦3.00, yielding ₦2.85 per share. Multiplying ₦2.85 by 90,000 shares gives the total net cash proceeds of ₦256,500 received into the bank account.

Step-by-Step Solution

1
Calculate the discount per share
₦0.15 per share
Discount is 5% of the nominal value (5% of ₦3.00 = ₦0.15).
2
Calculate the issue price per share
₦2.85 per share
When shares are issued at a discount, issue price = nominal value minus discount (₦3.00 - ₦0.15 = ₦2.85).
3
Calculate the total net cash received
₦256,500
Total cash received equals the number of shares issued multiplied by the issue price per share (90,000 × ₦2.85 = ₦256,500).

Key Concept

Issue of Shares at a Discount
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Topics

Issue of Shares at Par, Premium, and Discount

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