You own your own? firm, and you want to raise $30 million to fund an expansion.? Currently, you own? 100% of the? firm's equity, and the firm has no debt. To raise the $30 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 $15 ?million, what fraction of the equity will you need to sell to raise the remaining $15 ?million? (Assume perfect capital? markets.)
b. What is the smallest amount you can borrow to raise the $30 million without giving up? control? (Assume perfect capital? markets.)