CS Professional · Strategic Management and Corporate Finance · Sources of Corporate Funding
Nirmal Textiles Ltd plans a public issue of 40,00,000 equity shares at an issue price of Rs 75 per share, face value Rs 10. Issue expenses are Rs 2,00,00,000, to be met from the proceeds. What are the net proceeds available to the company?
Net proceeds are Rs 28 crore. Gross proceeds are 40,00,000 shares multiplied by Rs 75, which is Rs 30 crore, and deducting issue expenses of Rs 2 crore leaves Rs 28 crore available to the company for its objects.
- ARs 28,00,00,000Correct
- BRs 30,00,00,000
- CRs 32,00,00,000
- DRs 10,00,00,000
Explanation
Gross proceeds = 40,00,000 x 75 = Rs 30,00,00,000. Deducting issue expenses of Rs 2,00,00,000 gives Rs 28,00,00,000. Rs 30 crore ignores the expenses. Rs 32 crore wrongly adds them.
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