Explain how this decision will affect the company

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Question: Mvela Ltd has 100 000 shares in issue. The shares are currently trading at R100 per share. Mvela needs a new factory. The factory is expected to cost R900 000. The management decided to finance the construction of the new factory using a rights issue at R 90 per share.

Required:

Explain how this decision will affect the company's share price; Support your answer with calculations where possible.

Reference no: EM133492473

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