After successfully completing your corporate finance class, you feel the next ch

Question

After successfully completing your corporate finance class, you feel the next challenge ahead is to serve on the board of directors of Schenkel Enterprises. Unfortunately, you will be the only individual voting for you. Requirement 1: If Schenkel has 420,000 shares outstanding and the stock currently sells for $46, how much will it cost you to buy a seat if the company uses straight voting? (Do not include the dollar sign ($).) Total cost $ Requirement 2: Assume that Schenkel uses cumulative voting and there are four seats in the current election; how much will it cost you to buy a seat now? (Do not include the dollar sign ($).) Total cost $

Explanation / Answer

In cumulative voting , votes that can be cast = shares *no.of positions = 400,000*4 = 1600,000 votes so to win one should get at least 400,000 votes.. Only you are voting for your self..so you should have 400,000/1 shares = 400,000 shares that means , you should buy all the shares for a definite win.. so cost = 400,000*48 = $19,200,000

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