1)Facebook has announced a 1 for 4 rights issue at a 15% discount to the current market price of 4.00 per ordinary share. What is the theoretical ex rights price (TERP) per share and the value of rights per existing share?

2)Twitter is planning to buy a machine which will cost 400,000 and which is expected to generate new cash sales of 300,000 per year. The expected useful life of the machine will be seven years, at the end of which it will have zero scrap value. Initial investment in working capital of 70,000 will be needed. The company cost of capital is 10% and taxation may be ignored. Annual cost is expected to be 100,000. Evaluate the purchase of the machine using ARR and NPV.