Question

1.  The shareholders of the Pickwick Paper Company need to elect ten

directors. There are 300,000 shares outstanding.

     a. What is the minimum number of shares you need to own to ensure that you can elect at least one director if the company has majority voting?

b. What is the minimum number of shares you need to own to ensure that you can elect at least one director if the company has cumulative voting? (Round your answer

to the nearest whole number.)

2. If there are 7 directors to be elected and a shareholder owns 100 shares, calculate the maximum number of votes that he or she can cast for a favorite candidate under each of the voting methods.

Maximum no of votes

a. majority voting ——-

b. cumulative voting ——-

3. Common Products has just made its first issue of stock. It raised $1.8 million by selling 100,000 shares of stock to the public. These are the only shares outstanding. The par value of each share was $2. Complete the following table:

Common stock (par value) ——-

Additional paid-in capital ——-

Retained earnings ——-

Net common equity                     $2,000,000

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