Yehti Manufacturing (A). Dual classes of common stock are common in a number of countries.

Assume that Yehti 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.

to take advantage of its future growth and potential new drug production. The following table summarizes the financial situation of both firms:

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?

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Yehti Manufacturing Long-term debt Retained earnings Paid-in common stock: 1 million Local Currency (millions) 200 300 100 A-shares Paid-in common stock: 4 million B-shares 400 Total long-term capital 1,000