The Land Company wants to raise its working capital. After analysis of the available options, the Company decides to issue 6,000 shares of P30 par preference shares with detachable warrants. The package of the shares and warrants sells for P120. The warrants enable the holder to purchase 6,000 shares of P10 par ordinary shares at P40 per share. Immediately following the issuance of the shares, the share warrants are selling at P10 per share. The market value of the preference shares without warrant is P90. 1. What amount should be assigned to the share warrants issued? 2. Assuming that only 80% of the warrants are exercised, the entry to record the exercise of the warrants should include a?
The Land Company wants to raise its working capital. After analysis of the available options, the Company decides to issue 6,000 shares of P30 par preference shares with detachable warrants. The package of the shares and warrants sells for P120. The warrants enable the holder to purchase 6,000 shares of P10 par ordinary shares at P40 per share. Immediately following the issuance of the shares, the share warrants are selling at P10 per share. The market value of the preference shares without warrant is P90. 1. What amount should be assigned to the share warrants issued? 2. Assuming that only 80% of the warrants are exercised, the entry to record the exercise of the warrants should include a?
Chapter20: Financing With Derivatives
Section: Chapter Questions
Problem 8P
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Question
The Land Company wants to raise its
1. What amount should be assigned to the share warrants issued?
2. Assuming that only 80% of the warrants are exercised, the entry to record the exercise of the warrants should include a?
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