Question

A company with 40 million shares in issue announces a 2 for 5 rights issue at...

A company with 40 million shares in issue announces a 2 for 5 rights issue at a price of GH¢6 per
share. The market price of the existing shares before the rights issue is GH¢7.40.
Required:
i. What is the theoretical ex-right price?
ii. What is the theoretical value of the rights?

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