Use the Information for the Question(s)below

question 26

Multiple Choice

Use the information for the question(s) below.
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 $30 million in new debt,and you issue $20 million in new equity.Your ownership stake in the firm following these new issues of debt and equity is closest to:

• A)58%.
• B)50%.
• C)33%.
• D)55%.

---

Definitions:

Cooperation

The act of working together towards a common goal or interest.

Developmental Sequence

The ordered progression through which a system, organism, or organizational process matures or evolves.

Failure

The state or condition of not meeting a desirable or intended objective, and may be viewed as the opposite of success.

Any Point

This term is too vague without context and may not represent a specific key term in its current form.