Flint Computer Company is a small, closely held corporation. Eighty percent of the stock is held by Derek Wallace, president. Of the remainder, 10% is held by members of his family and 10% by Kathy Baker, a former officer who is now retired. The balance sheet of the company at June 30, 2017, was substantially as shown below.

Assets Liabilities and Stockholders Equity

Cash $ 19,500 Current liabilities $ 44,500

Other 400,500 Common stock 222,500

$ 420,000 Retained earnings 153,000

420,000

Additional authorized common stock of $267,000 par value had never been issued. To strengthen the cash position of the company, Wallace issued common stock with a par value of $89,000 to himself at par for cash. At the next stockholders meeting, Baker objected and claimed that her interests had been injured.

(c) If Derek Wallace offered Baker a personal cash settlement and they agreed to employ you as an impartial arbitrator to determine the amount, what settlement would you propose? Present your calculations with sufficient explanation to satisfy both parties.