Rights issue capital increase requires existing shares for market value adjustment Steps:

• Calculate proceeds: 100,000 shares × $2 =$200,000 cash inflow, increasing equity by $200,000 ($100,000 share capital + $100,000 premium).
• Repay loan: $100,000 cash outflow reduces liabilities by$100,000, leaving net cash +$100,000; equity unchanged by repayment.
• Overall equity (capital) +$200,000; market value of$3 suggests dilution via rights value, but existing shares needed for ex-rights price.
• Without existing shares, market adjustment impossible; accounting capital rises $200,000 (not an option).

Not enough information.

Final answer: Not enough information.