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You want a seat on the board of directors of Four Keys, Inc. The company has 300,000 shares of stock outstanding and the stock sells for $55 per share. There are currently 3 seats up for election. If the company uses cumulative voting, how many shares do you need to guarantee that you will be elected to the board

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sebastiansierraocm

Answer:

You need at minimum $75,001 shares

Explanation:

To solve this question, we need to use the cumulative voting formula:

[tex]x = \frac{S*N}{D + 1} + 1[/tex]

Where:

X = Mininum number of shares that must be owned

S = Number of shares outstanding

N = Number of directors we want to be certain of being elected (In this case, 1)

D = Total number of directors to be elected (In this case, 3).

Now, we simply plug the amounts into the formula

X = (300,000 x 1) / (3 + 1) + 1

X = 75,001

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