Brand plc generates profit after tax of 15 per cent on shareholders' funds. Its current capital structure is as follows:

....................................................................................€

Ordinary shares of 50c each.......................200,000

Reserves..........................................................400,000

..........................................................................600,000

The board of Brand plc wishes to raise €160,000 from a rights issue in order to expand existing operations. Its return on shareholders' funds will be unchanged. The current exdividend market price of Brand plc is €1.90. Three different rights issue prices have been suggested by the finance director: €1.80, €1.60 and €1.40.

Determine the number of shares to be issued, the theoretical ex-rights price, the expected earnings per share and the form of the issue for each rights issue price. Comment on your results