Assignment:
Bertrand Manufacturing (B). Assume all of the same debt and equity values for Bertrand Manufacturing in Problem 9, with the sole exception that both A-shares and B-shares have the same voting rights-one vote per share.
a. What proportion of the total long-term capital has been raised by A-shares?
b. What proportion of voting rights is represented by A-shares?
c. What proportion of the dividends should the A-shares receive?
Bertrand Manufacturing (A). Dual classes of common stock are common in a number of countries. Assume that Bertrand Manufacturing has the following capital structure at book value. The A-shares have ten votes per share and the B-shares have one vote per share.
Bertrand Manufacturing Local Currency(millions)
Long-term debt 200
Retained earnings 300
Paid•in common stock: 1 million A•shares 100
Paid-in common stock: 4 million B-shares 400
Total long-term capital 1.000
a. What proportion of the total long-term capital has been raised by A-shares?
b. What proportion of voting rights is represented by A-shares?
c. What proportion of the dividends should the A-shares receive?