Companies often need external money to maintain their operations and invest in future growth. There are two types of capital that can be raised: debt and equity. Equity financing refers to funds generated by the sale of shares. The main benefit of equity financing is that funds need not be repaid.

1. Discuss the differing UK and US position on rights issues
2. DGW Plc is looking to raise 36m to fund the purchase of its competitor, DL Plc. DGW Plc has 40m shares in issues, and the current market value of shares is 120 per share. The directors of DGW Plc have decided on a 1 for 4 rights issue.
3. 1. Calculate the ex-rights price
   2. Calculate the value of the right
   3. Show that shareholder wealth is unaffected regardless of whether rights are taken up or not