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Calculate the adjustment factor

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Question - The issued share capital of a company consists of 840,000 ordinary shares of £1 each.

Half way through its financial year the company made a rights issue of 1 for 6 at an exercise price of £1.71 a share.

The market value of the company's shares was £2.39 a share just before the rights issue..

The company reported a net profit after taxation for the year of £336,000.

The market value of each ordinary share at the end of the year was £2.98.

The theoretical ex-rights value per share is £2.29.

Calculate the adjustment factor (correct to 5 decimal places) to use to calculate earnings per share for the year. Do NOT calculate earnings per share - just the adjustment factor.

Reference no: EM133186404

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