CMA Intermediate · Financial Management and Business Data Analytics · Capital Market
Asha Textiles Ltd issues 8,00,000 equity shares of face value Rs 10 each at a premium of Rs 40 per share through a public issue. Issue expenses are Rs 12,00,000 and are paid from the proceeds. What is the net amount available to the company?
The net amount is Rs 3,88,00,000. The issue price is Rs 50 per share (Rs 10 face value plus Rs 40 premium), giving gross proceeds of Rs 4 crore on 8,00,000 shares, from which issue expenses of Rs 12 lakh are deducted.
- ARs 3,88,00,000Correct
- BRs 3,20,00,000
- CRs 4,00,00,000
- DRs 4,12,00,000
Explanation
Issue price = 10 + 40 = Rs 50. Gross proceeds = 8,00,000 x 50 = Rs 4,00,00,000. Net = 4,00,00,000 - 12,00,000 = Rs 3,88,00,000. Rs 3,20,00,000 ignores the premium and also the expenses wrongly considered; Rs 4,00,00,000 ignores issue expenses.
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