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i) By issuing6% debenture- $200K ii) By issuing8% preference shares-$100K i) By issuing of equity shares-$200K Then company will have to pay profit earned $50K(10% of $500K) as a) Debenture holders- $6K, Preference shareholders-$8K, Equity holders-$36K b) Debenture holders- $12K, Preference shareholders-$8K, Equity holders-$30K c) Debenture holders- $15K, Preference shareholders-$10K, Equity holders-$25K c) Debenture holders- $10K, Preference shareholders-$15K, Equity holders-$25K
When profit is to be paid, priority should be given to debenture holder, i.e.6% * $200k = $12k.
Then, it should be paid to preference share holder, i.e.8% * $100k =
b) Debenture holders- $12K, Preference shareholders-$8K, Equity holders-$30K
Profit - 50,000 -
To Debenture Holders- 12,000 (2,00,000*6%)
38,000
To Pref. Stakeholders- 8,000 (1,00,000*8%)
Balance to Equity Holders 30,000
i.e, Equity share Holders will get15%((30,000/2,00,000)*100) of dividend.
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