× Didn't find what you were looking for? Ask a question
Top Posters
Since Sunday
4
n
3
j
3
o
2
x
2
c
2
2
p
2
n
2
3
2
C
2
z
2
New Topic  
johnpaech johnpaech
wrote...
Posts: 1098
Rep: 7 0
6 years ago
Assume that capital markets are perfect, you issue $30 million in new debt, and you issue $20 million in new equity.  You ownership stake in the firm following these new issues of debt and equity is closest to:
A) 58%
B) 50%
C) 33%
D) 55%
Textbook 
Corporate Finance: The Core

Corporate Finance: The Core


Edition: 4th
Authors:
Read 63 times
1 Reply

Related Topics

Replies
wrote...
6 years ago
D
Explanation:  D) Owner's equity = value - debt - new equity = 75 - 30 - 20 = $25 million
Total equity = owners equity + new equity = $25 + $20 = $45 million
Owner's stake =   = .555555 or 55.56%
New Topic      
Explore
Post your homework questions and get free online help from our incredible volunteers
  914 People Browsing
Related Images
  
 292
  
 83
  
 965
Your Opinion
Which industry do you think artificial intelligence (AI) will impact the most?
Votes: 352

Previous poll results: What's your favorite math subject?