"Convertible Preferred Shares—Class A

Preferred shares with a 3% cumulative dividend yield, convertible into common shares at a rate of 2 preferred shares for 1 common share.
The preferred shares are redeemable with a 2% premium above the par value and retractable with a discount of 2% below the par value.

 

Convertible Preferred Shares—Class B

Preferred shares with a 4% cumulative dividend yield, convertible into common shares at a rate of 1 preferred share for 1 common share.
The preferred shares are redeemable with a 2% premium above par value.

 

Both classes issued 100,000 shares of each class, and each class shows $500000 on the SFP.

how do you allocate the $500000 between debt and equity?

please show calculations.

Answer rating: 100% (QA)

To allocate the 500000 between debt and equity we need to determine how much of the preferred shares qualify as debt and how much qualify as equity Fo... View the full answer