CIMA Financial Strategy F3 Question # 56 Topic 6 Discussion

CIMA Financial Strategy F3 Question # 56 Topic 6 Discussion

F3 Exam Topic 6 Question 56 Discussion:
Question #: 56
Topic #: 6

A company plans to raise $12 million to finance an expansion project using a rights issue.

Relevant data:

• Shares will be offered at a 20% discount to the present market price of $15.00 per share.

• There are currently 2 million shares in issue.

• The project is forecast to yield a positive NPV of $6 million.

What is the yield-adjusted Theoretical Ex-Rights Price following the announcement of the rights issue?


A.

$16.00


B.

$14.00


C.

$9.00


D.

$11.00


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