2. Azali Ltd is a large fashion retailer that has operations in many countries. The company wants to raise more funds for its operations. For this purpose the directors have decided to make a one-for-five rights issue at a discount of 30% on the current market value. The last profit and loss account of the business is as follows (figures in millions); Profit and loss account for the year ended 31 May 2019 Sales 1,400-0 Net profit before interest and taxation 52-0 Interest payable 24.0 Net profit before taxation 28.0 Corporation tax 7.0 Net profit after taxation 21.0 Ordinary dividends payable 14.0 Retained profit 7.0 Knowledge for Management Excellence The capital and reserves of the business as at 31 May 2016 are as follows: 250 ordinary shares 60-0 Revaluation reserve 140-0 Retained profit 3200 520-0 The shares of the business are currently traded on the Stock Exchange at a P/E ratio of 16 times. An investor owning 10,000 ordinary shares in the business, has received information of the forthcoming rights issue but cannot decide whether to take up the rights issue, sell the rights, or allow the rights offer to lapse. Required: (1) Calculate the theoretical ex-rights price of an ordinary share in Anzali Ltd (ii) Calculate the price at which the rights in Anzali Ltd are likely to be traded. (iii) Evaluate each of the options available to the investor with 10,000 ordinary shares