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Axon Industries needs to raise $22.41M for a new investment project. If the firm issues one-year debt, it may have to pay an interest rate
Axon Industries needs to raise $22.41M for a new investment project. If the firm issues one-year debt, it may have to pay an interest rate of 9.44 %, although Axon's managers believe that 5.51% would be a fair rate given the level of risk. If the firm issues equity, they believe the equity may be underpriced by 11.26 %. 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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