CMA Intermediate · Financial Management and Business Data Analytics · Capital Market
Anand Pharma Ltd issues 5,00,000 shares of Rs 10 face value at a premium of Rs 40 per share. Issue expenses are 4% of the gross issue proceeds. What is the net amount received by the company?
The company receives Rs 2,40,00,000 net. The issue price is Rs 50 (face value Rs 10 plus premium Rs 40), so gross proceeds are Rs 2,50,00,000. Issue expenses at 4% amount to Rs 10,00,000, which are deducted to give the net amount.
- ARs 2,40,00,000Correct
- BRs 2,50,00,000
- CRs 2,00,00,000
- DRs 48,00,000
Explanation
Issue price = 10 + 40 = Rs 50. Gross proceeds = 5,00,000 x 50 = Rs 2,50,00,000. Expenses = 4% x 2,50,00,000 = Rs 10,00,000. Net = Rs 2,40,00,000. Rs 2,50,00,000 ignores expenses.
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