You are an entrepreneur starting a mobile gaming company. The financial markets are frictionless. You need...

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You are an entrepreneur starting a mobile gaming company. The financial markets are frictionless. You need to raise $1 million to finance the development costs of your game. You find that investors are willing to finance the $1 million in exchange for 1/3 of the company's equity if the company takes on no debt. (The company currently has no debt.) What fraction of the equity would you need to sell to new investors in order to fund your development costs if you decided to borrow $500,000 of the development costs? You are an entrepreneur starting a mobile gaming company. The financial markets are frictionless. You need to raise $1 million to finance the development costs of your game. You find that investors are willing to finance the $1 million in exchange for 1/3 of the company's equity if the company takes on no debt. (The company currently has no debt.) What fraction of the equity would you need to sell to new investors in order to fund your development costs if you decided to borrow $500,000 of the development costs?

Answer rating: 100% (QA)

If you decide to borrow 500000 of the development costs then you would only need to raise 500000 in ... View the full answer