BDO plc generate profit after tax of $15\%$ on shareholders' funds. Its current capital structure is as follows:

$$

Ordinary shares of $50$p each $200,000$

Reserves $400,000$

$600,000$

The board of BDO plc wishes to raise $160,000$ from right issue in order to expand existing operation. Its return on shareholders' fund will be unchanged. The current e$-$dividend market price of BDO plc is $1\mathrm{.}90.$ Three different right issue prices have been suggested by the finance director: $1\mathrm{.}80,1\mathrm{.}60,$ and $1\mathrm{.}40.$

A$)$ Determine and comment on:

I. the number of shares to be issued

II$.$ The theoretical ex$-$right price

III. the expected earnings per share and the form of the issue for each right issue