Khloe owns 18 percent of KLK Clothing that has a total of 139,000 shares of stock outstanding.Each share receives one vote for each open seat on the board.The next election will select three new directors.The market price per share is $31.How much does Khloe need to spend,if any,to guarantee her election to the board if the firm has a cumulative voting policy and no one else votes for her?

Question

Quizplus · Accepted Answer

Total number of shares needed = [139,000 / (3 + 1)] + 1 = 34,751 shares
Additional shares needed = 34,751 − (0.18 × 139,000)= 9,731 shares
Additional investment needed = 9,731 × $31 = $301,661

Khloe Owns 18 Percent of KLK Clothing That Has a Total