As a result of a recession Dafen plc has recorded losses over the last three years and has been forced to increase its borrowing. The board of directors has decided that the company cannot increase its debt-equity ratio further and it has been decided to reduce its level of debt. On this basis it has decided to undertake a rights issue to raise 200 million. The companys shares are trading at 4.00 and it is proposed to make the rights issue at a discount of 20 per cent to this price. The company has 250 million shares outstanding. Determine ratio of old shares to new shares under the terms of the rights offer. Your typed answer should follow the format of new for old, i.e. 1 for 2.

As a result of a recession Dafen plc has recorded losses over the last three years and has been forced to increase its borrowing. The board of directors has decided that the company cannot increase its debt-equity ratio further and it has been decided to reduce its level of debt. On this basis it has decided to undertake a rights issue to raise 200 million. The companys shares are trading at 4.00 and it is proposed to make the rights issue at a discount of 20 per cent to this price. The company has 250 million shares outstanding.

Calculate the expected ex-rights price of a share.