QUESTION 2: (30 MINUTES, 15 MARKS) Consider each of the following parts independently of each other. Part I Air Canada has 500,000 common shares outstanding. The fair market price of each share is $400 per- which makes it unaffordable to certain investors. Air Canada desires to have its shares more widely available to all investors and is therefore considering whether to split its shares four-for-one or declare a 30% stock dividend. Required: a) Briefly explain which of the two options being considered would have the least impact on retained earnings and why? Support your answer with a quantitative analysis, if possible. [6 marks] Part II Dollarama has the following ampunts its audited Statement of Financial Position on January 30, 2022: Assets $4,063,562 Liabilities $4,129,596 Equity $(66,034) On January 30, 2022, Dollarama's market capitalization was approximately $20,000,000. Required: a) Briefly explain why a Dollarama's market capitalization was different from the shareholders' equity amount reported in its financial statements. [2 marks] b) What journal entry, if any, would Dollarama record to reflect its market capitalization? [2 marks] Part III On June 30, 2021, Pet Value Inc. took out a $2 million bank loan from a Canadian Bank. On March 30, 2022, Pet Value Inc. announced it would issuance new common shares from which it will raise cash proceeds of $10 million Required: a) If you were a banker at Canadian Bank, briefly explain how the issuance of new common shares could potentially affect the bank's outstanding loan? What are some potential positive or negative implications? [5 marks]