Influence of innovation project financing ways on the share price
Implementing an innovation project, investors pay special attention to the revenues that they will receive in the future. Funds needed to implement an innovation project can be raised through the issue of ordinary shares, or due to the issue of debt securities, or through the use of retained earnings. For this reason, investors determine the source of funding that will provide large returns on their invested capital. In addition, each funding source has its risks which affect profitability of the invested capital. For example, funding by attracting debt financing may increase the financial risk. If this risk collectively coincides with the operational risk, the company can face serious financial problems. The main method used to assess the impact of financial decisions on the shareholder's return, is a method of evaluating the relationship between the company's earnings before paying interest on the loan and taxes (EBIT) and earnings per share (EPS). These indicators are linearly related to a specific method of financing, but the proportionality factor reflects the specificity of the method for raising funds. Project financing can also be impacted by the cost of certain methods in attracting financial resources. This paper analyzes changes of income for investors while using various ways of financing with the influence of interest rates on corporate and individual taxes. The resulting estimates of the impact of financing ways, which allow for the effect of a combined set of factors on the value of future cash flows, provide investors with an economically validated decision to choose funding sources for the innovation project.