If your candidate receives one-fifth of the votes, that candidate will place at least fifth in the

If your candidate receives one-fifth of the votes, that candidate will place at least fifth in the balloting and will be elected to the board. Therefore, you need to cast 120,000 votes for your candidate, which requires that you own 24,000 shares.

Book value of common stockholders’ equity of Dow Chemical, December 31, 2010 (figures in billions).

Common shares ($2.4 par value per share)	$	2.950
Additional paid-in capital		2.305
Retained earnings		17.755
Treasury shares at cost		(0.258	)
Other		(4.894	)
Net common equity	$	17.858

a.	Suppose that Dow Chemical issues 100 million shares at $20 share. Show the company’s equity after the issue. (Negative amounts should be indicated by a minus sign. Enter your answers in billions rounded to 3 decimal places.)

Common shares	$
Additional paid-in capital
Retained earnings
Treasury shares at cost
Other
Net common equity	$

b.	Suppose that Dow subsequently repurchased 50 million shares at $50 a share. Rework part (a) to show the effect of the further change. (Negative amounts should be indicated by a minus sign. Enter your answers in billions rounded to 3 decimal places.)

Common shares	$
Additional paid-in capital
Retained earnings
Treasury shares at cost
Other
Net common equity	$

Explanation:

a.

Par value of common shares will increase by:

100 million shares × $2.40 par value per share = $240 million

Additional paid-in capital will increase by:

($20 − $2.40) × 100 million = $1.76 billion

b.

Treasury shares will increase by 50,000,000 × $50 = $2.5 billion.