Lunar plc is looking to raise finance for an investment opportunity. They are considering a rights Issue of $1$ for $6$ shares. Lunar plc shares are currently trading at $10\mathrm{.}50.$ They are considering an issue price of $8\mathrm{.}40$ per share. Below is an extract from Lunar plc most recent financial statements;

Equity & Liabilities

Ordinary Share Capital $(1\mathrm{.}20)360,000$

Share Premium $450,000$

Required:

a$)$ Calculate:

Theoretical Ex$-$Rights Price $($TERP$).$

Value of the right.

Total number of shares in issue after the right.

b$,$ Ella holds $6,300$ shares of Lunar plc and has just received notification from her broker informing her of the rights Issue.

Unsure of how to proceed Ella has asked for your help to demonstrate the impact of the below options on the value of her holdings.

i$.$ Take up the right.

ii$.$ Sell the right.

iii. Do nothing