Axon Industries needs to raise $26.70M for a new investment project. If the firm issues one-year...

 

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Axon Industries needs to raise $26.70M for a new investment project. If the firm issues one-year debt, it may haveto pay an interest rate of 8.10 %, although Axon's managers believe that 4.29 % would be a fair rate given the level of risk. If the firm issues equity, they believe the equity may be underpriced by 8.41 %. What is the cost to current shareholders of financing the project out of debr? NOTE: Provide your answers in Millions. E.G. for 100M you must enter 100.0000, for 20M you must enter 20.0000, etc. Axon Industries needs to raise $26.70M for a new investment project. If the firm issues one-year debt, it may haveto pay an interest rate of 8.10 %, although Axon's managers believe that 4.29 % would be a fair rate given the level of risk. If the firm issues equity, they believe the equity may be underpriced by 8.41 %. What is the cost to current shareholders of financing the project out of debr? NOTE: Provide your answers in Millions. E.G. for 100M you must enter 100.0000, for 20M you must enter 20.0000, etc.

Answer rating: 100% (QA)

Given Amount to raise for new investment project 2664M Interest rate 1134 Managers believe fair rate ... View the full answer