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The shareholders of the Mango Company need to elect seven new directors. There are 920,000 shares...

The shareholders of the Mango Company need to elect seven new directors. There are 920,000 shares outstanding currently trading at $52 per share. You would like to serve on the board of directors; unfortunately no one else will be voting for you. a. How much will it cost you to be certain that you can be elected if the company uses straight voting? (Do not round intermediate calculations and enter your answer in dollars, not millions, rounded to the nearest whole number, e.g., 1,234,567.) b. How much will it cost you if the company uses cumulative voting? (Do not round intermediate calculations and enter your answer in dollars, not millions, rounded to the nearest whole number, e.g., 1,234,567.)

Solutions

Expert Solution

1) Shares needed = (920,000 shares / 2) + 1

Shares needed = 460,001

Total cost = 460,001 × $52

Total cost = $23,920,052

2) Percent of stock needed = 1 / (N + 1)

Percent of stock needed = 1 / (7 + 1)

Percent of stock needed = 0.125, or 12.5%

Number of shares to purchase = (920,000 × 0.125) + 1

Number of shares to purchase = 115,001

Total cost = 115,001 × $52

Total cost = $5,980,052

jeff jeffy answered 2 years ago
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