ABC Ltd. is considering a right issue by issuing one share against two shares to raise funds to finance a new project requiring ₹ 4.5 Crore. The floatation cost will be 10% of funds raised. The company currently has 18 L

Value of rights = (Market Price Cum-Right - Offer Price) / (Number of existing shares to buy one new share + 1) Given: Market Price Cum-Right (MP CR ) = ₹ 100 Offer Price (OP) = ₹ 50 Number of existing shares to buy one new share (N 0 ) = 2 (since one share is issued against two shares) N 1 = 1 (new share) Value of rights = (100 - 50) / (2 + 1) = 50 / 3 = ₹ 16.67 Alternate Solution: Market value of 2 shares presently held = ₹ 200 Add: price to be paid for buying one share = ₹ 50 Total value of 3 shares = ₹ 250 Average value of one share = ₹ 250 / 3 = ₹ 83.33 Value of rights (₹) = Market value of one share - Average price of one share = 100 - 83.33 = ₹ 16.67