A company purchased a building for rs.12,00,000 out of which rs.2,00,000 were paid in cash. Balance amount was paid by issue of equity shares of rs.10 each at 25% premium. How many shares will be issued by the Company.
Answers
Answer:
1200000-200000= 1000000
10*25/100= 2.5
10 + 2.5 of premium = 12.5
1000000/12.5
80000
Given:
Money spent on purchasing the building= Rs.12,00,000
Amount paid in cash= Rs.2,00,000
Price of an equity share= Rs. 10
Premium= 25%
To find:
Number of shares issued by the company
Solution:
We can find the solution by following the given process-
We know that the amount for which the company has to issue shares= Cost of the building- cash paid
= 12,00,000-2,00,000
= Rs.10,00,000
We also know that the price of an equity share is Rs. 10.
On adding a premium of 25%, the actual price of share= 10+ 25% of 10
= 10+ 25×10/100
= 10+ 2.5
= Rs. 12.5
So, the number of shares allotted= Total amount for which shares are to be issued/ Price per share
= 10,00,000/12.5
= 80,000 shares
Therefore, the number of shares issued by the company is 80,000.