The moon company ltd has issued 10,000,000 ,10 per equity shares which are at present selling for 30 per share. The company has plan to issue rights to purchase one new equity share at a price of 20 per share for every four shares held

Required

Calculate the theoretical ex-rights price of moon company ltd.’s equity shares

The theoretical value of a right of moon company ltd before the shares sell ex-right

The chairman of the company receives a phone call from an angry shareholder who owns 100,000 shares. the shareholder argues that he will suffer a loss in his personal wealth due to his right issues because the new share are being offered at a price lower than the current market value.