Axon Industries Assignment | Professional Writing

Axon Industries needs to raise $23.46M for a new investment project. If the firm issues one-year debt, it may haveto pay an interest rate of 9.13 %, although Axon’s managers believe that 5.52 % would be a fair rate given the level of risk. If the firm issues equity, they believe the equity may be under priced by 9.32 %.

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What is the cost to current shareholders of financing the project out of Equity? NOTE: Provide your answers in Millions. E.G. for 100M you must enter 100.0000, for 20M you must enter 20.0000, etc. QUESTION 12 6 pc Axon Industries needs to raise $22.91 M for a new investment project. If the firm issues one-year debt, it may have to pay an interest rate of 8.07 %, although Axon’s managers believe that 5.41 % would be a fair rate given the level of risk. If the firm issues equity, they believe the equity may be under-priced by 10.66 %. What should be the undervaluation of equity to match the cost of debt? NOTE: Provide your answers in Percentages. E.G. for 10.15% you must enter 10.15, for 2.05% you must enter 2.05, etc.

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