AFM 101 Classroom Solutions - Nov 21st

AFM 101 Classroom Solutions - Nov 21st - E128 Req 1 a...

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E12–8 Req. 1 Preferr ed (6,000 Shares ) Common (40,000 Shares) Total a) Noncumulative: Preferred (6,000 x $2). ..................................................... $12,000 $12,000 Balance to common ($62,000 – $12,000). ....................... $50,000 50,000 $12,000 $50,000 $62,000 Per share. .......................................................................... $2.00 $1.25 b) Cumulative: Preferred, arrears (6,000 x $2 x 2 years). ......................... $24,000 $24,000 Preferred, current year (6,000 x $2). ................................ 12,000 12,000 Balance to common ($62,000 – $36,000). ....................... $26,000 26,000 $36,000 $26,000 $62,000 Per share. .......................................................................... $6.00 $0.65 Req. 2 The memo should address the following point. The dividend per common share was lower under the second assumption because the dividend per preferred share increased because of dividends in arrears while at the same time total dividends remained the same. Req. 3
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This note was uploaded on 12/19/2011 for the course AFM 101 taught by Professor Kennedy during the Fall '08 term at Waterloo.

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AFM 101 Classroom Solutions - Nov 21st - E128 Req 1 a...

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