Final answer:
To calculate the value of a right, you must consider the ex-rights price, the market price before the offer, and the ratio of old shares to new shares offered.
Step-by-step explanation:
The calculation of the value of a right, when a company issues new shares at a discount, is essential for investors who are considering whether to buy the rights or sell them. The ex-rights price is the price of a share after the rights have been detached from it. In this case, the ex-rights price is given as $72.67.
The total market value before the new issue is the number of shares multiplied by the price per share, which equals 154,000 shares times $83, totaling $12,782,000.
The new market value after the issue would incorporate the additional 77,000 new shares at the subscription price of $52, adding $4,004,000 to the market value. The sum of these gives a new total market value of $16,786,000. When we divide this new total market value by the new total number of shares, which is 231,000 (154,000 existing plus 77,000 new), we get the theoretical ex-rights price (TERP).
The value of a right can then be calculated as the difference between the market price before the offering ($83) and the theoretical ex-rights price. Typically, it is also adjusted by the ratio of old shares to new shares offered. Unfortunately, the provided information is not sufficient to complete the calculation because the total number of shares after the issue is not provided. Therefore, with the missing piece of information, I am unable to calculate the value of a right accurately.