PolyProduction Inc. has two classes of common stock. Class A has 5 million shares with 10 votes per share. Class B has 5 million shares with 1 vote per share. If the dividends per share are equal for both class A and B stock, then Class A shareholders have ________ of the votes and ________ of the dividends.

Question

Quizplus · Accepted Answer

Class A shareholders have 10 votes per share compared to 1 vote per share for Class B shareholders. Therefore, Class A shareholders have 90.91% of the votes [(5 million x 10)/(5 million x 10 + 5 million x 1) * 100%] while Class B shareholders have 9.09% of the votes [(5 million x 1)/(5 million x 10 + 5 million x 1) * 100%]. However, since the dividends per share are equal for both classes of stock, Class A shareholders do not necessarily receive a greater percentage of the total dividends. Therefore, Class A shareholders have 50.00% of the dividends, while Class B shareholders also have 50.00% of the dividends.