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N= 100 million shares N*=25 million shares Po= $ 2 Discount = 20% Ps= $1.6 Px= $1.92 The theoretical value of right = 0.32 Explain

N= 100 million shares

N*=25 million shares

Po= $ 2

Discount = 20%

Ps= $1.6

Px= $1.92

The theoretical value of right = 0.32

Explain the impact on the value of the right if the issue is undertaken on the specified terms and the share (cum-rights) price falls to 1.8 shortly after the shareholders are invited to subscribe to the new issue.

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