Q: a) How many new shares will be needed?

b) The ratio (N) of existing shares needed to obtain new shares

c) Explain why you recommend the discounted price rather than offering the shares at the current market price

d) What are the theoretical ex-rights price of the new shares?

e) What the theoretical value of each right will be

McWilliams Cars (MWC) is looking to expand its business into manufacturing electric sports cars and is contemplating a renounceable rights issue to raise funds to accomplish this. MWC currently has 50 million shares outstanding with a market value of $4.35 each. MWC needs to raise $120 million and has contracted you to design a rights issue to accomplish this. You recommend that the offer price for the new shares is $3.00 per share