Question

3. Ownership structure Consider an ownership structure (involving two firms A and B) where Company A owns 50% of Company B's shares, and Company B owns 25% of Company A's shares. The controlling family owns 1% of Company A's shares, 1% of Company B's shares, and manages Company A and B by holding the CEO position in these companies. If you need, the formula for infinite sum is: (1+x+x2+ x3+ x4+ 5+ x6+....)=1/(1-x). 50% Firm A Firm B 25% % Manager 3.1. (2 points) Estimate the cash flow rights of the controlling family. To be more specific, if Company B makes $200, how much is the legal amount that the controlling family should receive?

Answer 1

Direct cash flow rights in Company B = (N0) Indirect cash flow rights in company B = 1% (17.00.5) = 0.5% Total 1.5 % " Legal amount that controlling family should receine 7 $200 x 15% $31. I WN & Indirect Rights Mangger) 24 Company A i 0.5% sot Company &

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