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You own your own firm and you need to raise $50 million to fund an expansion. Following the expansion, your firm will be worth $75 million in its unlevered form. You want to go ahead with the expansion, but you are concerned that you may not be able to maintain ownership of over 50% of your firm's equity. In other words, you are concerned that if you use equity to finance the expansion, you may lose control of your firm.
-Assume that capital markets are perfect,you issue $25 million in new debt,and you issue $25 million in new equity.You ownership stake in the firm following these new issues of debt and equity is closest to:
Zygote
The initial cell formed when a new organism is produced by sexual reproduction, resulting from the fusion of two gametes (sperm and egg).
Gamete
A mature sexual reproductive cell, such as a sperm or egg, that unites with another cell to form a new organism.
Allele
A variation of a gene that influences an individual’s characteristics.
Genes
Biological units of heredity located in DNA, responsible for governing traits and characteristics passed from parents to offspring.
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