FINA 395 Chapter Notes - Chapter 15: Spot Contract, Callable Bond, Cumulative Voting

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25 Jan 2015

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15. 1 if the company uses straight voting, the board of directors is elected one at a time. You will need to own one-half of the shares, plus one share, in order to guarantee enough votes to win the election. So, the number of shares needed to guarantee election under straight voting will be: Shares needed = (600,000 shares / 2) + 1. If the company uses cumulative voting, the board of directors are all elected at once. Percent of stock needed = 1 / (7 + 1) Percent of stock needed = 0. 1250 or 12. 50% Number of shares to purchase = (600,000 0. 1250) + 1. And the total cost to you will be the shares needed times the price per share, or: 15. 2 if the company uses cumulative voting, the board of directors are all elected at once. So, the number of shares you need is: Number of shares to purchase = (5,800 0. 25) + 1.

Related Questions

Laura Lynn owns 20,700 shares of Global Exporters. Her shares have a total market value of $787,270. In total, the firm has 65,000 shares outstanding. Each share is entitled to one vote under the straight voting policy of the firm. The next election is in four months at which time two directors are up for election. How much more must Laura Lynn invest in this firm to guarantee that she is elected to the board?

$396,554

$448,820

$498,406

$547,478

byzantiummarten715

The shareholders of the Stackhouse Company need to elect seven new directors. There are 880,000 shares outstanding currently trading at $48 per share. You would like to serve on the board of directors; unfortunately no one else will be voting for you. How much will it cost you to be certain that you can be elected if the company uses straight voting? How much will it cost is the company uses cumulative voting?

You are interested in purchasing enough number of shares in ABC manufacturing so that you can be guaranteed a seat on the board of directors when the next annual shareholderâs meeting is held. ABC manufacturing currently has 10,000 shares outstanding. The corporation has not paid any dividends last year, but is expected to pay an annual dividend of $2.00/share at the end of year 2. During years 3-6 the company is expected to grow its dividends by 15% a year. Starting year 7, the company is expected to pay dividends that are growing only 4%/year from then on.

MUST SHOW WORK. MUST INCLUDE FORMULAS

1. Calculate the dividends the company will pay during years 2-7.

2. Assuming the required rate of return of 12% APR, calculate the value of one share of stock at the end of year 6 using the dividend growth model.

3. Assuming the required rate of return of 12% APR, calculate the value of one share of stock as of today (Year 0).

4. Assume that the board of directors have 12 members. How much money you need to spend now, in order to guarantee that you have a seat on the board of the company uses straight voting in the election for the board.

5. Assume that the board of directors have 6 members. How much money you need to spend now, in order to guarantee that you have a seat on the board of the company uses cumulative voting in the election for the board.

FINA 395 Chapter Notes - Chapter 15: Spot Contract, Callable Bond, Cumulative Voting

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