罗斯公司理财原书第七版Solutions Manual (7e)Ch014.doc

Chapter 14: Long-Term Financing: An Introduction14.1 a. Since the "common stock" entry in the balance sheet represents the total par value of the stock, simply divide that by the par per share:b. Capital surplus is the amount received over par, so capital surplus minus par gives you the total dollars received.In aggregate, the solution is:Net capital from the sale of shares = Common Stock + Capital Surplus= $135,430 + $203,145= $338,575Therefore, the average price is $338,575 / 67,715 = $5 per shareAlternatively, you can do this per share:Average price = Par value + Average capital surplus= $2 + $203,145 / 67,715 = $5 per sharec. Book value = Assets - Liabilities = Equity= Common stock + Capital surplus + Retained earnings= $2,708,600Therefore, book value per share is $2,708,600 / 67,715= $40.14.2 a. Common stock = (Shares outstanding ) x (Par value) = 500 x $1 = $500Total = 500 + 50,000 + 100,000 = $150,500b. After issuing 1000 new shares, the firm will have 1500 shares outstanding, and the Capital surplus is found as:That gives us:Common stock $1,500Capital surplus79,000Retained earnings 100,000Total$180,50014.3 a. In order to create the equity statement (following the example in the previous question or the text), first find the components:Common stock = 325,000 shares outstanding x $5 par = $1,625,000Capital Surplus = (Avg price - par) ( #shares) = ($5(1.12) - $5 ) (325,000) = $195,000Retained earnings = previous retained earnings + Net income - Dividends = $3,545,000 + $260,000 - ($260,000)(0.04) = 3,794,600Now, putting it all together:Shareholders’ equityCommon stock $1,625,000Capital in excess of par195,000Retained earnings 3,794,600Total$5,614,600b. Common stock = (325,000 outstanding + 25,000 new shares) x $5 par = $1,750,000Capital Surplus = previous capital surplus, plus surplus from sale of new issues = $195,000 + (Avg price - par) ( # new shares) = $195,000 + ($4 - $5 ) (25,000) [note the "surplus" is negative!] = $170,000Retained earnings = previous retained earnings + Net income - Dividends = $3,545,000 + $260,000 - ($260,000)(0.04) = 3,794,600Shareholders’ equityCommon stock $1,750,000Capital in excess of par*170,000Retained earnings 3,794,600Total$5,714,60014.4 a. Under straight voting, one share equals one vote. Thus, to ensure the election of one director you must hold a majority of the shares. Since two million shares are outstanding, you must hold more than 1,000,000 shares to have a majority of votes.b. Cumulative voting is often more easily understood through a story. Remember that your goal is to elect one board member of the seven who will be chosen today. Suppose the firm has 28 shares outstanding. You own 4 of the shares and one other person owns the remaining 24 shares. Under cumulative voting, the total number of votes equals the number of shares times the number of directors being elected, (28)(7) = 196. Therefore, you have 28 votes and the other stockholder has 168 votes.Also, suppose the other shareholder does not wish to have your favorite candidate on the board. If that is true, the best you can do to try to ensure electing one member is to place all of your votes on your favorite candidate. To keep your candidate off the board, the other shareholder must have enough votes to elect all seven members who will be chosen. If the other shareholder splits her votes evenly across her seven favorite candidates, then eight people, your one favorite and her seven favorites, will all have the same number of votes. There will be a tie! If she does not split her votes evenly (for example 29 28 28 28 28 28 27) then your candidate will win a seat. To avoid a tie and assure your candidate of victory, you must have 29 votes which means you must own more than 4 shares.Notice what happened. If seven board members will be elected and you want to be certain that one of your favorite candidates will win, you must have more than one-eighth of the shares. That is, if the percentage of the shares you must have to win is N, then:. Also notice that the number of shares you need does not change if more than one person owns the remaining shares. If several people owned the remaining 168 shares they could form a coalition and vote together.Thus, in the Unicorn election, you will need more than 1/(7+1) = 12.5% of the shares to elect one board member. You will need more than (2,000,000) (0.125) = 250,000 shares.14.4 (continued)To view cumulative voting more rigorously:1) let V = the Total Number of votes = the number of shares times the number of directors being elected= 2,000,000 x 7 = 14,000,0002) Let N be the number of shares you need. The number of shares necessary is 3) You will need more th。