Jet CEO Perspective

Contribute: Provide one or two solutions along with your explanations. Students are welcome (and encouraged) to discuss and share ideas with colleagues. Your score will be based on whether you participated, and not on the substance of your answer. The CEO is thinking life isn't fair: she owns 100% of a $50 million company so naturally would think that she could raise $20 million by selling 40%. But, if she tries to sell 40% she can only raise $19.4 million, since potential outside investors will realize she'll make some wasteful decisions as a 60% owner that she wouldn't have made if she held 100%. Thus, if she wants to raise $20 million in cash, she'll have to offer more than 40% of her shares. What a mess! Can you think of anyway she can raise $20 million without selling more than 40% of her shares?" This must be completed before moving on to the next page