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Unformatted text preview: 100,000 + $20,000) – [$90,000 from
entry (2) + $50,000 from entry (8)]
= $375,000 [from entry (4)] – $125,000 [from entry (5)] –
[from entry (7)] – $16,660 [from entry (10)] P12–13
a. Only investors of shares that are both issued and outstanding are eligible to vote to elect a board of
directors. If the current board could reduce the number of shares held by investors other than themselves,
then they would control a greater proportion of the shares outstanding and could decrease the probability
that Vadar, Inc., would take over Edmonds. One way that the board could consolidate its ownership
position is to reacquire the company's common stock from other investors. P12–13 Concluded
If the current board could consolidate its ownership so that it controlled 50% plus one share of the
outstanding shares, they could completely block Vadar, Inc.'s takeover attempt. In this particular case, the
current board members own 140,000 shares (35% 400,000 shares outstanding). To allow the board to
completely control the company without the board members personally acquiring...
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