Assume That Capital Markets Are Perfect Except for the Existence

question 2

Essay

Assume that capital markets are perfect except for the existence of corporate taxes and that your firm pays 35% of earnings in taxes.If you want to maintain ownership of at least 50% of your firm,then calculate the minimum amount of debt that you must issue to fund the expansion.

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Definitions:

Willful

Actions done deliberately or with the intention; often used in legal contexts to describe actions done with a wrongful purpose.

Malicious Conduct

Intentional actions done with harm in mind, often to injure, defraud, or otherwise damage another party.

Chapter 11

A provision of the United States Bankruptcy Code that permits businesses to reorganize and restructure their debts while continuing operations.

Reorganization Plan

A strategy employed by corporations to restructure their business for reasons such as improving efficiency, managing debt, or adapting to market changes.