Question
You own a firm, and you want to raise $35 million to fund an expansion. Currently, you own 100% of the firm's equity, and the
You own a firm, and you want to raise $35 million to fund an expansion. Currently, you own 100% of the firm's equity, and the firm has no debt. To raise the $35 million solely through equity, you will need to sell two-thirds of the firm. However, you would prefer to maintain at least a 50% equity stake in the firm to retain control.
a. If you borrow $25 million, what fraction of the equity will you need to sell to raise the remaining $10 million? (Assume perfect capital markets.)
you will need to sell ___% of the equity.(Round to one decimal place.)
b. What is the smallest amount you can borrow to raise the million without giving up control? (Assume perfect capital markets.)
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