Folly Limited wishes to raise £300,000 in cash. How many shares will the company have to issue to raise £300,000 if the shares have a par value of 50 pence and the shares are issued at a premium of 25 pence?

Question

Quizplus · Accepted Answer

The shares are issued at a total value of 75 pence each (50 pence par value + 25 pence premium). To raise £300,000, the company needs to issue £300,000 / £0.75 = 400,000 shares.

Folly Limited Wishes to Raise £300,000 in Cash