Steel Plus is a manufacturing company and is currently looking to build a new factory to cater for the demand for their product. Cost of building the new factory would require minimum MVR 9 million.   The company is considering raising finance via 1 for 7 rights issue at 20% discount to the current market price of MVR 12 per share. Issue cost is estimated to be MVR 200,000 and will be paid from the proceeds of the rights issue. Steel plus currently have 7 million ordinary shares outstanding.   Required     (a) What is the RI (Rights Issue) price and What is the TERP (Theoretical Ex-Rights Price)? (b) How much is the value of the right and  How many new shares will be issued? (c) How much new capital will be raised after taking into account the issue cost?

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Production Budget

A budget can be defined as a financial plan designed by an undertaking for a definite period in the future that can contribute towards enhancing the financial success of the business undertaking. It is used to estimate the revenue and expenses. The budget generally takes into account both current and future income and expenses.