Rahul Limited purchased a building from Handa Limited for Rs.5,40,000 and the payment is to be made by the issue of shares of Rs.100 each. What will the number of shares to be issued when shares issued at a premium of 20%?
Answer & explanation
Correct answer: option 4
The correct answer is Option (4) → 4,500 shares
Given:
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Purchase price of building = ₹5,40,000
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Face value of each share = ₹100
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Premium = 20% → Premium per share = ₹20
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Issue price per share = ₹100 + ₹20 = ₹120
Number of shares = Total Purchase Price / Issue Price per Share
= 5,40,000 / 120
= 4,500