owns 5 per cent of the outstanding shares in Poker Ltd, which has just announced a 1-for-5 rights issue with a subscription price of $1.90.

The current price (cum rights price) for Poker shares is $2.20. The number of outstanding shares in Poker Ltd is 5,000.

Calculate the theoretical ex-right price of the share and the value price of the right. Does the rights issue make Bill better off or worse off? Explain.

(Please show the formulae and working for understanding. thank you.)