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RIGHTS ISSUE
Accountancy
Chapter 5 ,Lecture 6, Value of Rights of subscription= benefit of shareholder and Value of right = In each share the value of right. I got confused with both of the terms, value of right of subscription and value of right Sir. can you please explain Sir?
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Best Answer
Rights Issue is at 1:2 Market Value per share = Rs.25 (Cum rights price) Right Issue Price = Rs.20 (the price at which rights can be subscribed) After rights issue, theoretical value per share = 23.33 (Ex-rights price) Value of Right of subscription = Ex-rights price - Right issue price = 23.33 - 20 = 3.33 Value of Right = Cum-rights - Ex-rights price =25-23.33 = 1.7 Value of Right of subcription = Value of Right x No.of shares to get 1 right share
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