Chapter 12 Case #2 Answer

If the corporation sells more common stock, then the Lambert must share voting rights and dividends with other stockholders.  If the corporation sells preferred stock, then earnings must be used to pay dividends to these stockholders before any can be paid to the Lamberts.  However, with preferred stock, voting rights do not need to be shared.   A decision about which kind of stock to issue is complicated and must be studied carefully.  Stock market specialists may have to be consulted