Hanging Valley plc has issued share capital of 2m ordinary shares, nominal value €1.00. The board of the company has decided it needs to raise €1m, net of issue costs, to finance a new product. It has been suggested that the additional finance be raised by means of a 1 for 4 rights issue. The issue price will be at a 20 per cent discount to the current market price of €2.75 and issue costs are expected to be €50,000. Calculate and explain the following:
(i) The theoretical ex-rights price per share;
(ii) The net cash raised;
(iii) The value of the rights.