Assume that capital markets are perfect except for the existence of corporate taxes and that your firm pays 40% of earnings in taxes.If you want to maintain ownership of at least a 50%,then the minimum amount of debt that you must issue to fund the expansion is closest to:

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B)V^U = $75 million % Ownership = 11ea7cce_3cd9_434c_928c_657612f6ff44_TB1626_11 Given: V^{L = VU +}^τ_cD new equity = $50 million needed for expansion - the amount of new debt: % Ownership = 11ea7cce_3cd9_434d_928c_bb17e6fde358_TB1626_11 % Ownership = 11ea7cce_3cd9_6a5e_928c_797b430d937c_TB1626_11 = .50 (given we want 50% ownership) $25 + .4(debt)= .50($75 - .6(debt)) 50 + 1.4(debt)= 75 Debt = 11ea7cce_3cd9_6a5f_928c_49d74ef27e8c_TB1626_11 = $17.857 million

Assume That Capital Markets Are Perfect Except for the Existence