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after successfully completing your corporate finance class, you feel the next challenge ahead is to serve on the board of directors of cornwall enterprises. unfortunately, you will be the only person voting for you. if the company has 390,000 shares outstanding, and the stock currently sells for $43, how much will it cost you to buy a seat if the company uses straight voting?

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Final answer:

To buy a seat on the board of directors of Cornwall Enterprises using straight voting, you would need to acquire over half of the 390,000 outstanding shares, which at $43 per share would cost a minimum of $8,385,043.

Step-by-step explanation:

When a public company decides to sell stock to financial investors, it allows for the ownership to be distributed among shareholders. These shareholders then hold the power to vote for the board of directors, who are responsible for making significant decisions and overseeing the management of the company.

In the context of straight voting, each share of stock entitles the shareholder to one vote per director being elected. To gain a controlling interest and effectively be able to elect a director of your choosing, you would need to own more than 50% of the voting shares.

In the case of Cornwall Enterprises, if you are the only person voting for yourself, you would need to control more than half of the company's 390,000 outstanding shares. With each share priced at $43, the cost to buy more than half the shares would be $43 multiplied by 195,001 (just over half of 390,000 to ensure majority). This results in a total cost of $8,385,043. However, this is a theoretical situation as, in reality, acquiring such a large number of shares would likely impact the stock price and require regulatory approvals.

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