Answer:
Market Value =$2,620,000
Explanation:
<em>A right issue is the offer of new shares to existing shareholders at a price lower than the current market price. This new shares are issued to each existing shareholders in proportion of their existing shareholding. This proportion is referred to as the </em><em>terms of the right issue</em><em>.</em>
The terms of rights in the question = 10,000 units new shares for 100,000 units existing shares= 1 ratio 10 i.e 1:10
The new market value of the firm would be
unit price(after issue) × Number of shares after issue
Unit price after issue is the weighed average value of the existing shares and right shares
Unit price = (10×24)+(1×22)/(10+1)= 23.818
Total number of shares = 100,000+ 10,000= 110,000
Market Value of the firm = 110,000×23.82=2,620,000
Market Value =$2,620,000