If a biotech or life science company that's moving towards commercialisation needed to raise capital of $50M in new capital and it had a choice of raising it through equity or debt (junk bond debt) is there an easy way of working out which source would be cheaper? One of my holdings Unilife recently transitioned from equity raisings to debt. I assume they calculated equity was becoming more expensive than debt.
For example, if my company had a share price of $1.00 and decided to raise capital at 80c, how would that stack up to loan shark bonds with an interest rate of 10 or 20%?
I've read up on Capital Asset Pricing Models but it just does my head in.
