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QUESTION

PRT Co has one million shares in issue and is preparing to make a one-for-four issue. The current market price of the shares is $2.

PRT Co has one million shares in issue and is preparing to make a one-for-four issue. The current market price of the shares is $2.00. At what price should the new shares be offered so as to avoid a drop in the share price following the issue? You can assume that the earrings performance of the new funds will be the same as on the existing funds.

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