CHAPTER 22

Solution RQ.22.16
1. Number of new shares = Rs.18,00,000/Rs.50 = 36,000 shares
2. Number of shares per right = 9,00,000/36,000 = 25, that is, 25 shares are needed to purchase
a new share at Rs.50.
3. Additional shares, an investor holding 96,000 shares of HL, can purchase on exercising his
rights:
= 96,000/25 =3,840 shares
4. (i) Theoretical value of a right when the share sells cum-rights:
58  50
= = Re.0.31
25  1
(ii) Theoretical value of a right when the share sells ex-rights:
57.69*  50
= = Re.0.31
25
* Rs.58 – Re.0.31
5. Amount the investor holding 96,000 shares of HL would get for his rights immediately after
the share goes ex-rights:
= 96,000 3 Re. 0.31 = Rs.29,760