Q11

Axon Industries needs to raise $24.84M for a new investment project. If the firm issues one-year debt, it may haveto pay an interest rate of 7.46 96, although Axon's managers believe that 4.57 % would be a fair rate given the level of risk. If the firm issues equity, they believe the equity may be underpriced by 8.28 96. 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. Axon Industries needs to raise $24.84M for a new investment project. If the firm issues one-year debt, it may haveto pay an interest rate of 7.46 96, although Axon's managers believe that 4.57 % would be a fair rate given the level of risk. If the firm issues equity, they believe the equity may be underpriced by 8.28 96. 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