The number of new shares to be issued, The number of rights to be issued to buy a new share and Value of right.

Alpha Limited plans to raise needed funds of $3,600,000 through the issue of new shares in the form of rights. The company has planned to set the subscription price 10% below its current market price of $12 per share. With 1 million shares outstanding, the number of new shares that need to be issued can be calculated by dividing the total required capital ($3,600,000) by the subscription price (10% less than $12 or $10.80). Therefore, 333,333.34 new shares must be issued in order for Alpha Limited to raise its target amount.

Next we need to calculate how many rights are necessary for an individual shareholder to buy a single new share priced at 10% below their current market value. To do this we divide one (1) new share by 10%, which is 0.1 and then multiply it with 100%. This gives us 1 right per 0.1 new share or 10 rights per each newly-issued share.

The final calculation is determining what value each right holds in terms of purchasing a single newly-issued share at a reduced subscription price. This can easily be found by subtracting ten percent from the original stock’s value – in this case 12$ – giving us 1080 cents = 10$ 8 cents as the value associated with each right that holders have been granted.

In conclusion Alpha Limited needs 333,333.34 new shares worth $10 80 cents each resulting in 3 600 000 total capital raised if all rights were exercised; along with 3 600 000 additional rights being granted entitling holders 1 additional newly-priced stock for every ten held