After successfully completing your corporate finance class, you feel the next ch
ID: 2820810 • Letter: A
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 350,000 shares outstanding, and the stock currently sells for $35, If there are four seats in the current election, how much will it cost you to buy a seat? (Do not round intermediate calculations.)
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 350,000 shares outstanding, and the stock currently sells for $35, If there are four seats in the current election, how much will it cost you to buy a seat? (Do not round intermediate calculations.)
Explanation / Answer
If the company uses straight voting one will need to own half of the shares, plus one share, in order to to win the election.
So, the number of shares needed to win will be:
(350,000/2)+1
=175001
The current price of the stock is $35
Thus the price of 175,001 shares is
175,001*35
=$ 6,125,035