Book value of common stockholders’ equity of Dow Chemical, December 31, 2010 (figures in billions).
Common shares ($1.5 par value per share) $2.934
Additional paid-in capital 2.289
Retained earnings 17.739
Treasury shares at cost (0.242)
Other (4.878)
Net common equity $17.842
Required:
a. Suppose that Dow Chemical issues 120 million shares at $25 share. Show the company’s equity after the issue.
b. Suppose that Dow subsequently repurchased 60 million
shares at $45 a share. Rework part (a) to show the effect of the further
change.
