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20 June, 20:54

You want a seat on the board of directors of Zeph, Inc. The company has 235,000 shares of stock outstanding and the stock sells for $60 per share. There are currently 5 seats up for election. If the company uses cumulative voting, how much will it cost you to guarantee that you will be elected to the board?

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  1. 20 June, 21:40
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    2,350,060

    Explanation:

    The computation of total cost is shown below:-

    Shares to be controlled = (Total number of shares * Number of directors needed) : (Total number of directors that will be elected + 1) + 1

    = (235,000 * 1) : (5 + 1) + 1

    = 235,000 : 6 + 1

    = 39,166.67 + 1

    = 39,167.67

    Total cost = Shares to be controlled * Stock sells per share

    = 39,167.67 * $60

    = 2,350,060

    So, for computing the total cost we simply applied the above formula.
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