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The Liquidity of Baja Corporation Has Been Decreasing, and It

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Essay

The liquidity of Baja Corporation has been decreasing, and it contemplates a rights issue. There are currently 2 million shares outstanding with a market value of $60 each. The firm needs to raise $24 million and wants you to design a rights issue that will allow the new stock price to be no lower than $55 and for there to be no more than 2.5 million shares outstanding after the issue. How many shares must be held to obtain the right to one new share, and what will be the price of the new share?


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