XYZ Ltd has 900,000 shares outstanding at current market price of Sh 130 per share. The company needs Sh 22,500,000 to finance its proposed expansion. The board of directors has decided to issue rights for raising the required funds. The subscription price has been fixed at Sh 75 per share. Required: (a) How many rights are required to purchase one new share? (b) What is the price of one share after the rights issue (Ex-right price)? Compute the theoretical value of each right (c) (d) Consider the effect of the rights issue on the shareholders' wealth under the three options available to the shareholders (Assume he owns 3 shares and has Sh 75 cash on hand). Solution: Illustration A company negotiates a Sh 30 million loan for eight years from a financial institution. The interest rate is 14% per annum on the outstanding balance of the loan. The principal and interest will be repaid in eight equal year-end instalments. Required Prepare a loan repayment schedule