Use the Information for the Question(s) Below

question 76

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 $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:

• A) 50%
• B) 55%
• C) 58%
• D) 33%

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Definitions:

Female Pelvis

The bony structure at the lower part of the abdomen, which is wider and shallower than the male pelvis, adapted for childbirth.

Amputation

The surgical removal of a limb, part of a limb, or other body part.

Appendage

An external body part or limb that is attached to the main body, such as an arm, leg, wing, or tail.

Surgical Removal

The process of excising or cutting out a body part or tissue typically through operative procedures.