Corp. Finance #14 Financing-Commons Stock & Preferred Stock

Explain residual claims to earnings by showing the order: bondholders, then preferred stockholders, then common shareholders. Describe how rising earnings can raise common equity while downturns emphasize bondholders' first claim.

Explore how a poison pill reduces a hostile group's control by diluting shares after a 17 percent trigger, with a 25 percent price discount.

Explore cumulative voting and how a minority can win two of five board seats with 100 shares, using formula directors needed times shares outstanding divided by directors to be elected.

Compute shares needed to elect five of nine directors via cumulative voting using (D×S)/(N+1)+1, with 250,000 shares outstanding, yielding 125,001.

Explore cumulative voting to determine how many directors the minority can elect given shares and seats. The lecture illustrates formulas with a 20-seat board, 55,000 shares, and 10,500 minority shares.

Analyze cumulative voting in a dissident stockholder scenario, comparing incumbents and dissidents as they allocate shares, proxies, and board seats to influence management outcomes.

Explore rights offerings in corporate finance, where stockholders buy discounted shares via a subscription price to maintain ownership. Calculate rights value during the rights period and during exercise.

Compute the value of one right in a rights offering and estimate the post-offer stock price using a 105 stock price, 91 subscription price, and seven rights per new share.

Explain a rights offering calculation for common stock, detailing one right per share, four rights needed per new share, and the impact on price, dilution, and acquisition cost.

Analyze a stock rights offering by comparing investing in rights versus stock, using a per-share discount, price movement scenarios, and a practical value formula to assess gains and losses.

Explore how a rights offering affects a shareholder’s asset position, evaluating rights value, exercise and non-exercise, dilution, and portfolio impact.

Explore how a rights offering affects earnings per share and the price-earnings ratio, including rights value and new share dilution.

Compare investment options like treasury bonds, corporate bonds, and preferred stock, and analyze post-tax yields under different tax rules, highlighting how tax exemptions shape decisions.

Compute preferred dividends in arrears: 9 times 300,000 per year; after 5 years, 13.5m; after 6 years, 16.2m; with 10m earnings, 6.2m remains before common dividends.

Understand dividends in arrears on preferred stock and how issuing bonds can cover 80 percent of the amount, with bond valuation and effects on common stock.

Analyze paying off dividends in arrears on preferred stock by issuing common stock, valuing the common stock via present value of four-year dividends and a future price.

Analyze a preferred stock borrow-and-invest decision, comparing after-tax yields from dividends to borrowing costs, with tax treatment, break-even analysis, and scenario testing in Excel or Google Sheets.

Explore straight vs floating rate preferred stock, comparing par value, yields (15% vs 11%), and price behavior as rates rise, highlighting investor risk and market calibration.

Analyze how earnings are allocated after bondholders' interest and preferred stock dividends, revealing the residual claims available to common stockholders.

Explain how a poison pill triggers in a hostile takeover using an excel worksheet. Compute thresholds: 14 million shares, 17% trigger, 25% discount to $56.25, and 2.38 million shares required.

Apply cumulative voting concepts from the Excel practice problem to determine shares needed to elect two of five directors, and analyze minority versus majority voting and vote concentration.

Explore how cumulative voting enables a minority to win board seats, calculate shares needed (7 of 14) with 120,000 shares using the formula in Excel, and compare to straight voting.

Learn how to compute shares needed for five of nine directors under cumulative voting using an Excel worksheet, applying the formula and evaluating potential block scenarios.

Explore cumulative voting to determine how many of twenty board seats you can elect, using Excel with two related formulas and a goal seek approach on 55,000 outstanding shares.

Explore cumulative voting through a dissident stockholder group scenario in Excel, analyzing board seats, proxies, and multiple scenarios to anticipate outcomes.

Apply Excel to rights offering problems, compute rights value during the rights period and the exercise period, derive theoretical rights price and nil paid price, and assess post-offering stock value.

Compute the value of rights in a rights offering using an Excel worksheet, comparing the stock price with rights to the subscription price and the rights required; assess post-expiration impact.

Use an Excel-based rights offering calculation to determine how many discounted shares you can acquire and the total exercise cost. Understand rights per share concept.

Analyze a rights offering in a corporate finance Excel exercise, calculate rights value and cash flows, and compare investing in rights versus buying stock when prices rise or fall.

Investigate how a rights offering impacts asset position by exercising or not exercising rights, determining right value, diluted stock price, and resulting portfolio changes.

Learn how a rights offering affects earnings per share and the price-earnings ratio, including discounted issue price, rights required, and share dilution via an Excel practice problem.

an Excel practice problem analyzes investment options including treasury bonds, corporate bonds, and preferred stock, showing how tax impact affects after-tax yields and decision making.

Calculate preferred dividends in arrears in excel, using 9 dollars per share on 300,000 shares, totaling 2.7 million per year for five years, and assess earnings impact on arrears.

Pay off five years of dividends in arrears on preferred stock by issuing bonds at 11 percent, to cover 80 percent of amount, using present value calculations in corporate finance.

Explore a corporate finance Excel exercise on borrowing to invest in preferred stock, calculating after-tax yields and break-even borrowing costs with tax exemptions on dividends.

Shows how straight and floating rate preferred stock differ in an Excel practice, illustrating price impact when rates rise and why floating rate can reduce investor risk.