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Unformatted text preview: any additional shares,
the total number of shares outstanding could not exceed 279,999 [(140,000 shares 2) – 1 share]. Since
260,000 shares are currently held by nonboard investors, and the nonboard members can control a total
of only 139,999 shares (279,999 shares – 140,000 shares held by board members), the company would
have to repurchase 120,001 shares of the company's stock.
b. The company will need to pay $50 per share for 120,001 shares [from part (a)]. Consequently, the
company will need at least $6,000,050 in cash. Edmonds currently has insufficient cash to repurchase all
120,001 shares. If the board wants to block Vadar's takeover attempt by repurchasing some of its common
stock, the company will have to borrow additional cash. c. Assets
Other current assets
Noncurrent assets Liabilities and Stockholders' Equity
6,320,000 Liabilities $ Common stock
Less: Treasury stock (6,000,050)
Total assets $
13,569,950 Total liabilities and s...
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