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Calculate the theoretical value of a right

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Reference no: EM132976811

Adam plc (public limited company) has in issue 2,000,000 equity shares. The shares have a current market value of £4 per share. The company now plans to issue rights to purchase one new share, at a price of £2.50 per share, for every five shares held.

Required:

Problem a) Calculate the theoretical ex rights price.

Problem b) Calculate the theoretical value of a right.

Reference no: EM132976811

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