In this workout, Wimbledon and Chelsea have both announced rights issues.

We've been given lots of information about the rights issue.

Interesting to note that they've both got the same market cap, so they've both got the same number of shares and share price, but their issue prices were different and the terms of the issuance were different.

But if we look down, we notice that the rights issue proceeds were exactly the same.

If we carry on down, we are asked to calculate the theoretical X Rights price or the turp and the value of the rights. There's two things we need to calculate here.

In order to calculate the turp, we need to come up with a great big formula, which is going to have the market capitalization of the companies after the rights issue divided by the number of the shares of each company after the rights issue.

So let's do this for Wimbledon. First, we're gonna start with the com rights market capitalization. Now com rights means prior to the rights issue.

So that means they're old existing shares times by the closing price the day before the announcements 1000.

Now I need the rights issue proceeds, and we've already got that.

It's 1,350.

If I add those two together, that gives me my theoretical X Rights market cap.

What I need to do now is divide that by the total share count after the rights issue.

So I need to go find their old number of shares, which was 500, and I'm gonna add onto that the 900 that were issued.

Great. I can calculate that. Turp.

It's the theoretical X Rights market cap divided by the number of shares.

Now, what's the value of each? Right? That's the difference between the TURP and the issue price.

So let's take that turp, subtract off the issue price of 1.5 and we've got the value of each right being naught. Point two. Now we can copy all of this to the right for Chelsea, and the numbers are quite different, but that's okay. Nothing wrong with that at all.

So what was that value of each right representing that represents the compensation that shareholders will receive if they decide to pass on the rights issue?