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You own a firm, and you want to raise $40 million to fund an expansion. Currently, you own 100% of the firm's equity, and
You own a firm, and you want to raise $40 million to fund an expansion. Currently, you own 100% of the firm's equity, and the firm has no debt. To raise the $40 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 $20 million, what fraction of the equity will you need to sell to raise the remaining $20 million? (Assume perfect capital markets.) b. What is the smallest amount you can borrow to raise the $40 million without giving up control? (Assume perfect capital markets) a. If you borrow $20 milion, what fraction of the equity will you need to sell to raise the remaining $20 million? (Assume perfect capital markets.) If you borrow $20 million, to raise the remaining $20 million you will need to sell % of the equity (Round to one decimal place.) b. What is the smallest amourt you can borrow to raise the $40 million without giving up control? (Assume perfect capital markets) The smallest amount you can borrow to raise the $40 million without giving up control is $million (Round to one decimal place)
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