Burgess Ltd$$s debt to equity ratio is far above the industry average and they have just announced a rights issue in order to raise funds to pay off $$36$ million worth of the company$$s bonds.

The company$$s capital structure includes $32$ million common shares currently selling for $$12\mathrm{.}60.$ Based on an analysis by their lead broker a subscription price of $$9$ has been approved by the Board.

Required:

a$)$ Vishal Kumar, who owns $1,600$ shares in the company, is not sure whether to exercise his rights or sell them and would like to know how much his rights are worth. Calculate the value of his rights during the rights$-$on period $(6$ marks$)$

b$)$ Advise Vishal which alternative, exercising his rights or selling them will result in greater wealth. Providing calculations to justify the advice given. $(8$ marks