CIMA Exam CIMAPRA19-F03-1 Topic 4 Question 109 Discussion

Actual exam question for CIMA's CIMAPRA19-F03-1 exam

Question #: 109
Topic #: 4

[All CIMAPRA19-F03-1 Questions]

A company needs to raise $20 million to finance a project.

It has decided on a rights issue at a discount of 20% to its current market share price.

There are currently 20 million shares in issuewith a nominal value of $1 and a marketprice of $5per share.

Calculate the terms of the rights issue.

A1 new share for every 4 existing shares

B1 new share for every 20 existing shares

C1 new share for every 5 existing shares

D1 new share for every 25 existing shares

Show Suggested Answer

Suggested Answer: A

Calc_Set2

by Willard at Apr 03, 2025, 04:27 PM

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Louvenia

1 months ago

Oof, this is a tough one. I'm leaning towards option C, but I'm also a little worried that I might be overthinking it. At the end of the day, it's all about the numbers, right? *scratches head*

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Nadine

I'm going to go with option C as well. Let's see if we're all on the same page with this one.

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Beth

18 days ago

Yeah, I agree. Option C seems like the most logical choice based on the information given.

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Freida

19 days ago

I think you're on the right track with option C. It's all about the numbers, just trust your gut.

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Cecil

2 months ago

Alright, let's do this! I'm going with option A. One new share for every four existing shares sounds about right. Plus, it's the first option, so it must be the easiest one, right? *laughs*

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Glenn

5 days ago

Yeah, option A makes the most sense. It's a fair distribution of new shares based on the current number of existing shares.

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Margot

9 days ago

User3: Yeah, option A makes the most sense. Let's go with that.

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Ronny

13 days ago

I think option A is the correct one too. It's straightforward and makes sense given the information provided.

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Marvel

1 months ago

I agree with you, option A seems like the most logical choice. It's a simple ratio to follow.

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Dalene

1 months ago

User2: Agreed, that seems like the most logical choice.

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Mi

1 months ago

User1: I think option A is the way to go. One new share for every four existing shares.

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Mabel

2 months ago

I'm not sure about the calculation, but I think the terms of the rights issue should be A) 1 new share for every 4 existing shares.

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Hmm, I'm not too sure about this one. Maybe option D? Doesn't seem like a lot of shares need to be issued for $20 million. I wonder if the person who wrote this question has ever tried to raise capital before.

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Brande

9 days ago

Let's calculate it together to be sure.

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Zita

18 days ago

I see where you're coming from, but I still think it's option A.

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Catarina

29 days ago

Really? I was leaning towards option C, 1 new share for every 5 existing shares.

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Ashleigh

1 months ago

I think it's actually option A, 1 new share for every 4 existing shares.

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Mendy

2 months ago

I agree with Tommy. The discount of 20% means the new share price will be $4, which is 20% less than the current market price of $5.

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Lashandra

2 months ago

I think option C is the correct answer. The company needs to raise $20 million, and with a 20% discount, the new share price would be $4. With 20 million shares currently in issue, the company would need to issue 5 million new shares to raise the required $20 million.

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Tommy

2 months ago

I think the answer is A) 1 new share for every 4 existing shares.

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CIMA Exam CIMAPRA19-F03-1 Topic 4 Question 109 Discussion

Contribute your Thoughts:

Louvenia

Nadine

Beth

Freida

Cecil

Glenn

Margot

Ronny

Marvel

Dalene

Mi

Mabel

Mignon

Brande

Zita

Catarina

Ashleigh

Mendy

Lashandra

Tommy