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Calculate the theoretical ex-rights price

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Question - A company has 1- for -4 rights issue at the discount price of $8. The cum-rights price is $16.

(i) Calculate the theoretical ex-rights price (ii) Value of the nil-rights (iii) Show that the rights issue is non-dilutive irrespective of whether the investor participates in the issue (iv) Do you think the theoretical err-rights price will prevail after the issue?

Reference no: EM133186691

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