A company plans to issue 20 000 ordinary shares of $1 each in October at an issue price of $1.20 per share. Calculate the total cash proceeds expected from the share issue.

Proceeds from a share issue are the number of shares issued multiplied by the actual issue price received, not the nominal (par) value alone. 20 000 shares x $1.20 =$24 000. Using the $1 nominal value only gives $20 000, and using just the $0.20 premium gives $4 000, both of which omit part of the total cash actually received.