Question

You want a seat on the board of directors of Zeph, Inc. The company has 205,000 shares of stock outstanding and the stock sells for $78 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?

Answer 1

$2,665,104

Step-by-step explanation:

Calculation for how much will it cost you to guarantee that you will be elected to the board using cumulative voting

First step is to calculate percentage of the numbers of shares needed

Percentage of numbers of shares needed=1/(1+5)

Percentage of numbers of shares needed=1/6

Percentage of numbers of shares needed=16.6667%

Second step is to calculate the total number of shares

Total number of shares=205,000 shares*16.6667%

Total number of shares=$34,167

Therefore you will be to have $34,168 ($34,167+$1)

Last step is to calculate the Total cost

Total cost=$34,168*78 per share

Total cost=$2,665,104

Therefore how much will it cost you to guarantee that you will be elected to the board is $2,665,104