Compute the theoretical value of share ex-right

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Amiable company offered existing shareholders a rights issue of one for 5 shares at a price of 6 per share to be exercised on April 1, 2020. The market value of share was 12 on that date.

On January 1, 2019, there are 810,000 ordinary shares outstanding.

The entity reported net income of 2,250,000 for 2019 and 3,500,000 for 2020

Required:

Question 1: Compute the theoretical value of share ex-right.

Question 2: Compute the adjustment factor.

Question 3: Compute the basic earnings per share for 2019 and 2020.

Reference no: EM132539692

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