Raul wants to join the directors of World Trade but currently owns no shares in the company. He knows that no one else will help elect him. Assume there are 46,000 shares outstanding at a market price of $12.80 a share. What is the minimum amount Raul must spend to acquire a seat on the board of directors if there are three open seats and straight voting applies?

Question

Quizplus · Accepted Answer

To win a seat on the board of directors, Raul needs to have more than 1/4 of the total shares. 
1/4 of 46,000 shares is 11,500 shares. 
To get exactly 11,500 shares, Raul would need to spend 11,500 x $12.80 = $147,200. 
However, since Raul needs to have at least one more share than 1/4 of the total shares, he should buy 11,501 shares, which would cost him 11,501 x $12.80 = $147,212.80. 
Since there are three open seats, Raul needs to multiply his cost by three, so the total minimum amount he must spend to acquire a seat on the board of directors is 3 x $147,212.80 = $441,638.40. However, since none of the other answer choices are close to this amount, the best choice is C, which is the closest to the calculation.

Raul Wants to Join the Directors of World Trade but Currently