Mullan has 5 million shares outstanding and its shares currently sells for 20 per share. Mullan has announced a right issue to raise 30 million. The subscription price is set at 15 per share.

1. Calculate the ex-rights price and the value of a right?
2. Calculate the portfolio value of a shareholder with 500 shares after the right offer, if;

1. The shareholder sells its right in the market

ii. The shareholder lets its rights to expire.

c) Comment on the values you have calculated in part (b).