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Axon Industries needs to raise $24.61M 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 $24.61M for a new investment project. If the firm issues one-year debt, it may have to pay an interest rate of 10.25 %, although Axon's managers believe that 4.83 % would be a fair rate given the level of risk. If the firm issues equity, they believe the equity may be under priced by 8.71 %. What is the cost to current shareholders of financing the project out of Equity?
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