A) Read and translate the following text

Date: 2015-10-07; view: 694.

Distribution of the Capital

Structure of the Capital

a) Look at these sentences about who owns the shares in Jayal Motors at present and who will own them after Tom retires.

Carl: Who owns the share capital in the company?

Paul:Well, Tom has 55%, Tara and I together 20%, Jack has 15% and the bank the remaining 10%.

Carl: What's the total share capital?

Paul: 600,000 utiles.

Tom:(to Carl) The amount you are proposing (to put up) would give you both a 25% holding in the company

* * * * *

Tom:I'd like to keep a 25% stake in the company for my retirement. And I like to hand over the other 130,000 utiles. I'd like to give Paul and Tara 100,000, giving them a 28% stake…As for you, Jack, I'd like to give you the other 30,000. That will keep your stake at 15%.

Paul: That'll leave the bank with only 7%.

b) Fill in the figures about Jayal Motors' share capital in this table using the information in the above statements (you will need to do some simple mathematical calculations). Some of the spaces have been filled in for you. Two of the figures given in the dialogues are not quite accurate. Which two are they? What should the figures be?

The total equity capital of Jayal Motors is 600,000 utiles in the form of ordinary shares and debentures. Debentures are a safe form of investment as they are really a form of loan. If the company goes bankrupt, the debenture - holders are paid back before any other creditors.

Debenture - holders receive a fixed rate of interest each year (here 10%). The bank owns all the debentures in Jayal Motors. (Jayal Motors have also borrowed 200,000 utiles from the bank. They must pay 15% interest on this loan to the bank each year). Jayal Motors' ordinary shares are owned by Tom, Paul, Tara and Jack. Any profit the company makes is divided between the debentures. Before the dividend is paid, Jayal Motors are subtract 5,000 utiles which they out back into the business each year (this money is called "retained profits")/

The company estimate income for the next two years is:

first year: 45,000 utiles,

second year: 55,000 utiles.

Notes:

c) How will this money be distributed with the company's present financial structure? The figures for the first year are already filled in on this table. Fill in the figures for the second year.

c) Carl and Eve are contributing 200,000 utiles to Jayal Motors in the form of ordinary shares. Because of this, Jayal Motors can pay back the 200,000 - utiles loan to the bank. draw up a table like the one above to show how the estimated income for the next two years will be distributed under the company's new capital structure.