Question

On January 5, 2022, Phelps Corporation received a charter granting the right to issue 5000 shares at $100 par value 8% cuμlative preferred stock and 50000 shares of $10 par value common stock. It then completed these transactions:

a. True
b. False

Answer 1

The minimum number of investors it would take to vote to change the company's top management depends on the majority voting rule. Investors 1 and 2 cannot be certain of always getting their way in how the company will be run.

Step-by-step explanation:

The minimum number of investors it would take to vote to change the company's top management is determined by the majority voting rule. In this case, the majority voting rule means that more than 50% of the total outstanding shares need to be in favor of the change. To calculate this, we add up the number of shares owned by investors 1 and 2 (20,000 + 18,000 = 38,000) and divide it by the total number of outstanding shares (100,000). This gives us a percentage of 38%. Since this is less than 50%, investors 1 and 2 would not be able to change the company's top management on their own.