ILLUSTRATION 16. Raygold Ltd. (RL) has a paid-up equity share capital of $ 200 lakhs represented by 4 lakhs shares of $ 50 each. Earnings after tax in the most recent year (2015-2016) were $80,00,000 of which $ 26,50,000 was distributed as dividend. The current price/earning ratio of these shares as reported in the financial year is 8. The company (RL) is planning a major investment that will cost $ 240 lakhs and is expected to produce additional after-tax earnings over the foreseable future at a rate of 15 per cent on the amount invested. The necessary finance is to be raised by a rights issue the existing shareholders at a price 25 per cent below the current market price of the company's shares. to You are required to calculate : (i) the current market price of the shares already in issue; (ii) the price at which the rights issue will be made; (iii) the number of new shares that will be issued; (iv) the value of the rights; (v) the price at which the shares of company should theoretically be quoted on completion of the rights issue(i.e., the ex-rights price), ignoring incidental and transaction costs. Assuming that the rate of return on existing funds is 12.5% and the market accepts the company's forecast of incremental earnings