Question

Hi-Lo has 160,000 shares outstanding priced at $33 a share. There will be three open positions on its board in the next election. Currently, you are not a shareholder but would like to become one and also gain a seat on the board. a. How much will it cost you to buy a seat if the company uses straight voting? b. What if the firm uses cumulative voting?

Answer 1

Answer:

total cost = $2640033

cost = $1320033

Explanation:

given data

share = 160,000

priced = $33 a share

solution

we first find here cost for buy seat using straight voting that is express as

cost to buy seat = cost × share needed   ...............1

Shares needed = 50 % of shares + 1 share

Shares needed = 50 % of  160000  + 1

Shares needed =  80001

so total cost is

Total cost = 80001 × $33

total cost = $2640033

and

Cost for cumulative voting  is here

Cost = price × $\frac{shares}{number of seats+1} + 1$

Cost = $33 × $\frac{160000}{3+1} + 1$

cost = $1320033