Solution-New equity capital to fund project

New equity capital to fund project

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Reference no: EM133113206

A company needs $200,000 to fund a new project next year. The firm expects to earn excess cash of $75,000 this year after all expenses, taxes, and dividends are paid. The firm can borrow up to $150,000 at 6.5 percent interest for up to ten years or, it can issue up to 25,000 new shares of stock that will have an estimated value of $35 a share at the end of this year. According to the pecking-order theory, how much will the firm raise in new equity capital to fund this project?

Reference no: EM133113206

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New equity capital to fund project

Reference no: EM133113206

Reference no: EM133113206

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