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 person voting for you. The company has 430,000 shares outstanding, and the stock currently sells for $51, If there are four seats in the current election, how much will it cost you to buy a seat

Answer 1

$4,386,051

Step-by-step explanation:

For computation of cost to buy a seat first we need to follow some steps which is shown below:-

Step 1 :

Number of seats available for election = 4

So, the percentage of stock needed = 1 ÷ (4 + 1)

= 20%

Step 2

Number of Stock needed = (Outstanding shares × Percentage of stock) + 1

= (430,000 × 20%) + 1

= 86,000 + 1

= 86,001

and finally

Total cost required to buy a seat = Number of Stock × Stock Currently Sold

= 86,001 × $51

= $4,386,051

So, we have applied the above formula.