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X Ltd. had 5,000 12% Redeemable Preference Shares of Rs. 100 each. The company decided to redeem them by issuing equity shares of Rs. 100 each @ a premium of 255. The member of equity shares to be issued are:
- a)4000 shares
- b)5000 shares
- c)4480 shares
- d)5600 shares
Correct answer is option 'B'. Can you explain this answer?
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X Ltd. had 5,000 12% Redeemable Preference Shares of Rs. 100 each. The...
The given information:
- X Ltd. had 5,000 12% Redeemable Preference Shares of Rs. 100 each.
- The company decided to redeem them by issuing equity shares of Rs. 100 each @ a premium of 255.
To find:
The number of equity shares to be issued.
Solution:
Step 1: Calculate the redemption value of preference shares:
The redemption value of the preference shares can be calculated by multiplying the number of preference shares by their face value.
Redemption value of preference shares = Number of preference shares × Face value
Redemption value of preference shares = 5,000 × 100
Redemption value of preference shares = Rs. 5,00,000
Step 2: Calculate the premium on redemption:
The premium on redemption can be calculated by subtracting the face value of the preference shares from their redemption value.
Premium on redemption = Redemption value of preference shares - Face value of preference shares
Premium on redemption = Rs. 5,00,000 - (5,000 × 100)
Premium on redemption = Rs. 5,00,000 - Rs. 5,00,000
Premium on redemption = Rs. 0
Step 3: Calculate the number of equity shares to be issued:
The number of equity shares to be issued can be calculated by dividing the premium on redemption by the premium per share.
Number of equity shares to be issued = Premium on redemption / Premium per share
Number of equity shares to be issued = 0 / 255
Number of equity shares to be issued = 0
Step 4: Calculate the total number of shares after redemption:
The total number of shares after redemption can be calculated by adding the number of preference shares and the number of equity shares.
Total number of shares after redemption = Number of preference shares + Number of equity shares
Total number of shares after redemption = 5,000 + 0
Total number of shares after redemption = 5,000
Therefore, the company will redeem the preference shares by issuing 5,000 equity shares. Hence, the correct answer is option 'B'.
- X Ltd. had 5,000 12% Redeemable Preference Shares of Rs. 100 each.
- The company decided to redeem them by issuing equity shares of Rs. 100 each @ a premium of 255.
To find:
The number of equity shares to be issued.
Solution:
Step 1: Calculate the redemption value of preference shares:
The redemption value of the preference shares can be calculated by multiplying the number of preference shares by their face value.
Redemption value of preference shares = Number of preference shares × Face value
Redemption value of preference shares = 5,000 × 100
Redemption value of preference shares = Rs. 5,00,000
Step 2: Calculate the premium on redemption:
The premium on redemption can be calculated by subtracting the face value of the preference shares from their redemption value.
Premium on redemption = Redemption value of preference shares - Face value of preference shares
Premium on redemption = Rs. 5,00,000 - (5,000 × 100)
Premium on redemption = Rs. 5,00,000 - Rs. 5,00,000
Premium on redemption = Rs. 0
Step 3: Calculate the number of equity shares to be issued:
The number of equity shares to be issued can be calculated by dividing the premium on redemption by the premium per share.
Number of equity shares to be issued = Premium on redemption / Premium per share
Number of equity shares to be issued = 0 / 255
Number of equity shares to be issued = 0
Step 4: Calculate the total number of shares after redemption:
The total number of shares after redemption can be calculated by adding the number of preference shares and the number of equity shares.
Total number of shares after redemption = Number of preference shares + Number of equity shares
Total number of shares after redemption = 5,000 + 0
Total number of shares after redemption = 5,000
Therefore, the company will redeem the preference shares by issuing 5,000 equity shares. Hence, the correct answer is option 'B'.
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X Ltd. had 5,000 12% Redeemable Preference Shares of Rs. 100 each. The company decided to redeem them by issuing equity shares of Rs. 100 each @ a premium of 255. The member of equity shares to be issued are:a)4000 sharesb)5000 sharesc)4480 sharesd)5600 sharesCorrect answer is option 'B'. Can you explain this answer?
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X Ltd. had 5,000 12% Redeemable Preference Shares of Rs. 100 each. The company decided to redeem them by issuing equity shares of Rs. 100 each @ a premium of 255. The member of equity shares to be issued are:a)4000 sharesb)5000 sharesc)4480 sharesd)5600 sharesCorrect answer is option 'B'. Can you explain this answer? for CA Foundation 2025 is part of CA Foundation preparation. The Question and answers have been prepared according to the CA Foundation exam syllabus. Information about X Ltd. had 5,000 12% Redeemable Preference Shares of Rs. 100 each. The company decided to redeem them by issuing equity shares of Rs. 100 each @ a premium of 255. The member of equity shares to be issued are:a)4000 sharesb)5000 sharesc)4480 sharesd)5600 sharesCorrect answer is option 'B'. Can you explain this answer? covers all topics & solutions for CA Foundation 2025 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for X Ltd. had 5,000 12% Redeemable Preference Shares of Rs. 100 each. The company decided to redeem them by issuing equity shares of Rs. 100 each @ a premium of 255. The member of equity shares to be issued are:a)4000 sharesb)5000 sharesc)4480 sharesd)5600 sharesCorrect answer is option 'B'. Can you explain this answer?.
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X Ltd. had 5,000 12% Redeemable Preference Shares of Rs. 100 each. The company decided to redeem them by issuing equity shares of Rs. 100 each @ a premium of 255. The member of equity shares to be issued are:a)4000 sharesb)5000 sharesc)4480 sharesd)5600 sharesCorrect answer is option 'B'. Can you explain this answer?, a detailed solution for X Ltd. had 5,000 12% Redeemable Preference Shares of Rs. 100 each. The company decided to redeem them by issuing equity shares of Rs. 100 each @ a premium of 255. The member of equity shares to be issued are:a)4000 sharesb)5000 sharesc)4480 sharesd)5600 sharesCorrect answer is option 'B'. Can you explain this answer? has been provided alongside types of X Ltd. had 5,000 12% Redeemable Preference Shares of Rs. 100 each. The company decided to redeem them by issuing equity shares of Rs. 100 each @ a premium of 255. The member of equity shares to be issued are:a)4000 sharesb)5000 sharesc)4480 sharesd)5600 sharesCorrect answer is option 'B'. Can you explain this answer? theory, EduRev gives you an
ample number of questions to practice X Ltd. had 5,000 12% Redeemable Preference Shares of Rs. 100 each. The company decided to redeem them by issuing equity shares of Rs. 100 each @ a premium of 255. The member of equity shares to be issued are:a)4000 sharesb)5000 sharesc)4480 sharesd)5600 sharesCorrect answer is option 'B'. Can you explain this answer? tests, examples and also practice CA Foundation tests.
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