Calculate the total number of shares to be issued

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The same capital of Labasa Limited consists of 2 million shares which have a current market price of $2.50 per share.yhe company intends to undertake a major capital project which has a budget of $1 million. At a recent board meeting, manager presented three methods for financing the project, including a public offering, a private placement and a rights issue. The directors plan to make a two for five rights issue.

Question A) i) calculate the total number of shares to be issued based on the board decision.

ii) calculate the price to be paid for each shares.

Question B) Briefly outline one reason:

i) why the directors may have decided to make a rights shares.

ii) why you support or oppose their plan.

Question C) briefly outline how Labasa Ltd could arrange a private placement.

Reference no: EM132653214

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