Paolo Limited is issuing 200,000 ordinary shares with a par value of 50 pence each at a premium of 250 pence per share together with 100,000 preference shares with a par value of 50 pence each at a premium of 10 pence per share. How much cash is Paolo Limited looking to raise from this share issue?

Question

Quizplus · Accepted Answer

Paolo Limited is issuing ordinary shares at a total price of 300 pence each (50 pence par value + 250 pence premium) and preference shares at a total price of 60 pence each (50 pence par value + 10 pence premium). The cash raised from ordinary shares is 200,000 shares * £3.00 = £600,000. The cash raised from preference shares is 100,000 shares * £0.60 = £60,000. Total cash raised is £600,000 + £60,000 = £660,000.

Paolo Limited Is Issuing 200,000 Ordinary Shares with a Par