Smith and Roberson’s Business Law
17th Edition
ISBN: 9781337094757
Author: Richard A. Mann, Barry S. Roberts
Publisher: Cengage Learning
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Chapter 36, Problem 6Q
Summary Introduction
To discuss: The decision of minority shareholder on the purchase of both company G and Company B by Company ZS
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Paul Bunyan is the owner of noncumulative 8 percent preferred stock in the Broadview Corporation, which had no earnings or profits in 2012. In 2013, the corporation had large profits and a surplus from which it might properly have declared dividends. The directors refused to do so, however, instead using the surplus to purchase goods necessary for the corporation’s expanding business. The corporation earned a small profit in 2014. The directors at the end of 2014 declared a 10 percent dividend on the common stock and an 8 percent dividend on the preferred stock without paying preferred dividends for 2013. a. Is Bunyan entitled to dividends for 2012? For 2013? b. Is Bunyan entitled to a dividend of 10 percent rather than 8 percent in 2014?
VIOLETS Company purchased 5,000 shares of POPPY Company par ₱100 at ₱120 in March 2020 VIOLETS received a share dividend of 1 share for every 5 owned on August 30, 2020. On September 15, 2020, the firm received a cash dividend of ₱10 per share. On October 1, 2020, VIOLETS was granted the right to purchase 1 share at ₱105 for every 4 rights held. The share had a market value of ₱115 and the right had a value of ₱5 on the date the rights were received. On December 15, 2020, the company sold 2,000 rights at ₱7.50 and exercised the remaining rights. What is the average unit cost of the total investment as of December 31, 2020?
Companies A and B differ only in their capital structure. A is financed 30% debt and 70% equity: B is financed 10% debt and 90% equity. The debt of both companies is risk-free.
a. Rosencrantz owns 1% of the common stock of A. What other investment package would produce identical cash flow for Rosencrantz?
b. Guildenstern owns 2% of common stock of B. What other investment package would produce identical cash flows for Guildenstern?
Chapter 36 Solutions
Smith and Roberson’s Business Law
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