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After successfully completing your corporate finance class, you feel the next challenge ahead is to serve on the board of directors of Schenkel Enterprises. Unfortunately, you will be the only person voting for you. The company has 405,000 shares outstanding, and the stock currently sells for $46, If there are four seats in the current election, how much will it cost you to buy a seat if the company uses cumulative voting

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Answer:

$3,726,046

Explanation:

Calculation for how much will it cost you to buy a seat if the company uses cumulative voting

Cumulative voting seat cost = 46 ×{[405,000/(4 + 1)] + 1}

Cumulative voting seat cost=46×[(405,000/5)+1]

Cumulative voting seat cost=46×81,001

Cumulative voting seat cost= $3,726,046

Therefore how much will it cost you to buy a seat if the company uses cumulative voting is $3,726,046

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