1. Dividend distributions a. If Megaco is a Delaware corporation, what is the maximum dividend it can pay common shareholders? Explain your reasoning. b. If Megaco is a California corporation, what is the maximum dividend it can pay common shareholders? Explain your reasoning. Consider the following balance sheet for Megaco: Consider the following balance sheet for Megaco: Assets Liabilities Current assets $1.0m Current liabilities $0.5m Property, Plant, and Equip. $4.0m Long-term debt $3.0m Total liabilities $3.5m Equity Common stock Preferred stock Treasury stock Retained earnings $1.0m $1.0m ($1.0m) $0.5m Total shareholder equity $1.5m Total assets 5.0m Total liabilities and equity $5.0m Note that treasury stock is negative $1 million, reflecting the company's repurchase of $1 million in shares. Megaco's net income this past year was $0.5m. In the event of dissolution, the preferred stock is entitled to the first $2 million left over after the liabilities are paid. Megaco is current on all dividends to the preferred stock. 1. Dividend distributions a. If Megaco is a Delaware corporation, what is the maximum dividend it can pay common shareholders? Explain your reasoning. b. If Megaco is a California corporation, what is the maximum dividend it can pay common shareholders? Explain your reasoning. Consider the following balance sheet for Megaco: Consider the following balance sheet for Megaco: Assets Liabilities Current assets $1.0m Current liabilities $0.5m Property, Plant, and Equip. $4.0m Long-term debt $3.0m Total liabilities $3.5m Equity Common stock Preferred stock Treasury stock Retained earnings $1.0m $1.0m ($1.0m) $0.5m Total shareholder equity $1.5m Total assets 5.0m Total liabilities and equity $5.0m Note that treasury stock is negative $1 million, reflecting the company's repurchase of $1 million in shares. Megaco's net income this past year was $0.5m. In the event of dissolution, the preferred stock is entitled to the first $2 million left over after the liabilities are paid. Megaco is current on all dividends to the preferred stock