the verbrugge publishing company 2012 balance sheet and income statement are as follows in million of dollars

balance sheet

current assets $168 current liabilities $42

net fixed assets $153 advance payment 78

goodwill $15 reserve 6

$6 preferred stocl, 112.50 par value (1,200.00 shares) 135

$10.50 preferred stock no par, callable at $150 (60,000) 9

common stock $1.50 par value (6,000,000) shares 9

retaining earning 57

total asset $336 total claims 336

income statement

net sales $540.0

operating expense $516.0

net operating income $24.0

other income $3.0

ebt $27.0

taxes 50% $13.5

net income $13.5

dividend on $6 preferred $7.2

dividend on $10.50 preferred $0.6

income available to common stockholders $5.7

verbrugge and its creditors have agreed upon a voluntary reorganization plan. in this plan each share of the $6 preferred will be exchanged for one shares of $2.40 preferred with a par value of $37.50 plus one 8% subordinated income debenture with a par value of $75. the $10.50 preferred issue will be retired cash.

a. construct the projected balance sheet while assuming that reorganinzing takes place. show the new preferred stock at its par value

b. construct the projected income statement. what is the income available to common share holders in the proposed recapitalization?

c. required earning is defined as the amount that is just enough to meet fixed charges debentures interest and /or preferred dividends. what are the required pre tax earning before and after the recapitalization?

d. how is the debt ratio affected by the reorganization? if you were a holders of verbrugge common stock, would you vote in favor of the reorganization? why or why not