QUESTION 1
(Capital structure decision making, learning units 7, 13 and 14)
a. Determine the amount of funding that the company requires and the amount of
rights the company would have to issue if it is assumed that transaction and related
costs amount to 10% of the value of each right issued, while it is expected that the
issue will be fully taken up if the price of a right is set to 20c.
The amount of funding required = R30 000 000 + R20 000 000 = R50 000 000
Including transaction costs = 100% x R50 000 000 = R55 555 556
90%
(Capital structure decision making, learning units 7, 13 and 14)
a. Determine the amount of funding that the company requires and the amount of
rights the company would have to issue if it is assumed that transaction and related
costs amount to 10% of the value of each right issued, while it is expected that the
issue will be fully taken up if the price of a right is set to 20c.
The amount of funding required = R30 000 000 + R20 000 000 = R50 000 000
Including transaction costs = 100% x R50 000 000 = R55 555 556
90%
