Question
Struggling with this question. Any help is greatly appreciated. Thank you! A firm has 1,000 shares of common stock outstanding with a par value of
Struggling with this question. Any help is greatly appreciated. Thank you!
A firm has 1,000 shares of common stock outstanding with a par value of $15 per share. Upon liquidation, the firm has insufficient funds and requires an additional $5,000 to repay its creditors. Which of the following statements is true about the common shareholders' financial obligation?
If the share is purchased for $8, the stockholders are obligated to pay $2 per share to the creditors.
If the share is purchased for $20, the stockholders are obligated to pay interest equal to $15 per share to the firm.
If the share is purchased for $15, the stockholders are obligated to pay $15 per share to the bondholders.
If the share is purchased for $18, the stockholders are obligated to pay a dividend of $3 per share to the firm.
If the share is purchased for $10, the stockholders are obligated to contribute $5 per share to the firm.
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Principles Of Corporate Finance
Authors: Lawrence J. Gitman, Sean M. Hennessey
2nd Canadian Edition
0321452933, 978-0321452931
